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U.S. POSTAGE PAIDNMP MEDIA CORP.

NMP MEDIA CORP.1220 WANTAGH AVENUEWANTAGH, NEW YORK 11793

Will You Demand More?Demand more than inaccurate AVMs and outdated ‘rules engines’ with

StreetLinks’ new Automated Examination & Valuation solutions. Bring your process up to speed with QX today!

p: 1.800.521.6926 | e: [email protected] | www.streetlinks.com

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STATE OFFICERSPhone # E-mail

Paul Logan President (800) 295-1020 [email protected] Mahler Jr. President-Elect (717) 299-6801, ext. 27 [email protected] Angelo Vice President (717) 397-7500 [email protected] Tom Constan Secretary (610) 690-7400, ext. 228 [email protected] Cesare Treasurer (570) 824-7811 [email protected] Stancato Immediate Past President (610) 430-6901 [email protected] Anthony Board Member (717) 591-3278 [email protected] D’Alonzo, CMC Board Member (215) 657-9600 [email protected] Braafhart Board Member (717) 731-9700 [email protected] Clarke Board Member (724) 453-0335 [email protected] Hanzimanolis, CRMS Board Member (570) 620-9561 [email protected] Krause Board Member (717) 269-4957 [email protected] Piestrak Board Member (570) 207-6334 [email protected] Scott Jr. Board Member (215) 669-3273 [email protected] Stephans Board Member (610) 977-0662 [email protected]

REGIONAL LEADERSHIPPaul Krause Central Chapter Governor (717) 269-4957 [email protected] Piestrak North East Governor (570) 207-6334 [email protected] Angelo South Central Governor (717) 397-7500 [email protected] Beth Stephans South East Governor (610) 977-0662 [email protected] Clarke Western Governor (724) 453-0335 [email protected]

COMMITTEE CHAIRSJim Mahler Jr. By-Laws Committee (717) 299-6801, ext. 27 [email protected] Fisher By-Laws/Ethics Committee (215) 852-5978 [email protected] Anthony Communications Committee (717) 591-3278 [email protected] Angelo Community Relations Committee (717) 397-7500 [email protected] Paul Logan Conference Committee (800) 295-1020 [email protected] D’Alonzo, CMC Education Committee (215) 657-9600 [email protected] Krause Finance Committee (717) 269-4957 [email protected] Hanzimanolis, CRMS Legislative Committee (570) 620-9561 [email protected] Scott Jr. Membership Committee (215) 669-3273 [email protected] Braafhart Membership Committee (717) 731-9700 [email protected] Cesare Nominating Committee (570) 824-7811 [email protected] Anthony Past President’s Council (717) 591-3278 [email protected] Frank, CRMS Past President’s Council (215) 510-9701 [email protected]

PAMB OFFICESarah Schmidt Administrative Assistant (717) 737-2117 -------------------

Pennsylvania Association of Mortgage BrokersP.O. Box 390

Wilkes Barre, PA 18703-0390Web site: www.pamb.org

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A Special Look at “Tomorrow’s Mortgage Technology”Mortgage Fraud: Wrestling With the Octopus … and Winning! By Greg Holmes..............................................44A Call for Automation: The Key to Driving Quality and Efficiency in Lending By Scott A. Reed ........................45How Far Will You Go? By BJ Bounds ..................................46Future of Lending: Data-Driven Lending By Rob Pommier 47Business Units: No Longer Islands By Sanjeev Dahiwadkar 48

FeaturesThe Cream of the Cream By Al Crisanty..........................4The Elite Performer: Overcome Being Overwhelmed By Andy W. Harris, CRMS..........................................................4CFPB Extends Comment Period for Two Proposed Rules By Melanie A. Feliciano..................................6Loan Originator Compensation: Past is Prologue (Part II) By Jonathan Foxx ......................................................8Bonded With NAMB: C’Mon … Step Right Up and Play the Shell Game By Mason Grashot, CPA ................10Still Standing: Lessons From a Survivor of the Mortgage Industry Meltdown By Paul Anastos ........12For Managers Only: Are Your Loan Officers CEOs? By Dave Hershman ................................................................18Scenes From the Mortgage Bankers Association’s 99th Annual Convention & Expo ....................................20NAMB Perspective ..........................................................22Lykken on Lending: The Importance of Local Leadership By David Lykken ......................................24NMP Mortgage Professional of the Month: David Wind By David J. Coster..............................................26Fun, Photos and Featured Speakers at NAMB National By John Stevens ....................................30Mortgage Producer: Who Are You? By Eric Levin..............30Marketing in 2012: Fall Tips to Maximize Your Marketing Dollars ..................................................32Pursuing Excellence:Do You Know Your Competition? By Casey Cunningham ............................................................32FHA MIP Program Creating Surplus of Trigger Leads for Mortgage Marketing By K. Justin Restaino ..........33Buying Signals (Part II) By Kerry Johnson, MBA, Ph.D. ..........34USA Cares Mortgage Heroes: Norman Zolkos of Menlo Park Funding By Jennifer Robinson ........................36Not So Free Enterprise in the Mortgage Industry By Carey Hollander ................................................................42Why I Love Being a Mortgage Broker and Will Never Jump Ship By Mike Anderson, CRMS ..........................56

ColumnsHeard on the Street ........................................................6NMP News Flash: November 2012 ................................16New to Market ................................................................34NMP Mortgage Professional Resource Registry ..........52NMP Calendar of Events ................................................56

Visit Our

ADVERTISERS

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America’s Choice Home Loans .......................... www.achlonline.com ............................................9

Amerisave Mortgage Corporation ...................... www.amerisavetpo.com ........................................25

Brokers Compliance Group................................ www.brokerscompliancegroup.com ........................27

Calyx Software ................................................ www.calyxsoftware.com ......................................20

CBC National Bank .......................................... www.cbconnex.com ............................................19

Data Facts........................................................ www.datafacts.com ..............................................49

Document Systems, Inc./DocMagic .................... www.docmagic.com ....................................14 & 15

Equity Loans LLC .............................................. www.equityloans.com ..........................................41

FindMortgageJobs.com .................................... www.findmortgagejobs.com ..........................22 & 24

First Guaranty Mortgage Corp. .......................... www.fgmcwholesale.com ......................................43

Flagstar Bank .................................................. www.flagstar.com ............................................28-29

Guaranteed Home Mortgage Company .............. www.joinGHMC.com ............................................39

HomeBridge .................................................... www.homebridgewholesale.com ..........................51

Hometown Lenders ........................................www.whotookmybacon.com ..................................13

Icon Residential Lenders, LLC ............................ www.iconwholesale.com ......................................17

Maximum Acceleration Coaching ...................... www.maccelcoach.com/webinars ..........................21

Meadowbrook Financial Mortgage Bankers Corp. .. www.mortgagesalesjob.com ..................................37

Menlo Park Funding ........................................ www.menloparkfunding.com ................................19

NAMB NATIONAL .............................................. www.nambnational.com ........................12, 30 & 42

NAPMW .......................................................... www.napmw.org ..................................................16

NFM, Inc. ........................................................ www.nfmbranch.com ..........................................31

PB Financial Group Corp. .................................. www.pbfinancialgrp.com ......................................20

REMN (Real Estate Mortgage Network)................ www.remnwholesale.com ......................................7

Ridgewood Savings Bank .................................. www.ridgewoodbank.com ....................................35

Streetlinks LLC ................................................ www.streetlinks.com ....................Inside Front Cover

TagQuest ........................................................ www.tagquest.com ................................................5

The Bond Exchange .......................................... www.thebondexchange.com ................................18

Titan List & Mailing Services, Inc. ...................... www.titanlists.com ........................Inside Back Cover

United States Appraisals .................................. www.unitedstatesappraisals.com ..........................11

United Wholesale Mortgage .............................. www.uwm.com ........................................Back Cover

National Mortgage Professional Magazine

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NMPNMPNovember 2012 Volume 4, Number 11 Company Web Site Page

From The Publisher’s DeskNovember 2012Volume 4 • Number 11

1220 Wantagh Avenue • Wantagh, NY 11793-2202Phone: (516) 409-5555 • Fax: (516) 409-4600

Web site: NationalMortgageProfessional.comSTAFF

Eric C. PeckEditor-in-Chief

(516) 409-5555, ext. [email protected]

Joel M. BermanPublisher - CEO


David CosterSenior Editor

[email protected]

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[email protected]

Jon BlakeAdvertising Coordinator(516) 409-5555, ext. 301

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Beverly KoondelNational Account Executive


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ADVERTISINGTo receive any information regarding advertising rates, deadlines andrequirements, please contact National Account Executive Beverly Koondelat (516) 409-5555, ext. 316 or e-mail [email protected].

ARTICLE SUBMISSIONS/PRESS RELEASESTo submit any material, including articles and press releases, pleasecontact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or [email protected]. The deadline for submissions is the first ofthe month prior to the target issue.

SUBSCRIPTIONSTo receive subscription information, please call (516) 409-5555, ext.301; e-mail [email protected] or visit www.nationalmort-gageprofessional.com. Any subscription changes may be made to theattention of “Circulation” via fax to (516) 409-4600.

Statements, articles and opinions in National Mortgage Professional Magazineare the responsibility of the authors alone and do not imply the opinion orendorsement of NMP Media Corp., or the officers or members of NationalAssociation of Mortgage Brokers and its State Affiliates (NAMB), NationalAssociation of Professional Mortgage Women (NAPMW), National CreditReporting Association (NCRA) and/or other state mortgage trade associations.

Participation in NAMB, NAPMW, NCRA, and/or other state mortgagetrade associations events, activities and/or publications is available ona non-discriminatory basis and does not reflect the endorsement of theproduct and/or services by NMP Media Corp., NAMB, NAPMW, NCRA,and other state mortgage trade associations.

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 complianceaspects of advertisers, products or services and/or the editorial content con-tained in NMP Media Corp. publications. National Mortgage ProfessionalMagazine and NMP Media Corp. reserve the right to edit, reject and/or post-pone the publication of any articles, information or data.

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Both ends of the spectrumThis month, we will all give thanks as we sit down and share in the annual Thanksgivingmeal with our families, segueing into the 2012 holiday season and welcoming the year2013. For me personally, this holiday season will be one where I cherish these momentson a whole new level, step back and realize exactly what I have to be thankful for …family, friends, the ability to continue to do what I enjoy doing with a passion, and mostimportantly, the life which I have that gives me the ability to enjoy such things.

My October began with a bang, the prospect of headed to Chicago to attend theMortgage Bankers Association 99th Annual Convention and Expo. The pre-registration

numbers were through the roof for this event, as nearly 3,500 were expected to attend, a huge statementin these times and to me, a huge return to normalcy in the mortgage industry. My time in the Windy Citywas a whirlwind experience, great meetings, new prospects, amazing speakers ranging from formerPresident Bill Clinton and New York Mayor Rudy Giuliani, and a new wealth of useful information learnedto take my business to the next level.

But then, things took a turn for the worse as life intervened and business took a backseat to the will tosurvive the natural forces of Mother Nature ...

I came back from Chicago, reached out to my contacts and the ball got rolling. New alliances wereformed, partnerships were established and things looked like they were well on their way to returning tothe pre-recession era mortgage industry we came to know and love. The weatherman said her name wasSandy … but he failed to also mention that Sandy would forever change life as I knew it. For nearly 20hours from Oct.29-30, 80-90 mile per hour gusts of wind and eight foot storm surges battered my homearea of Long Island, N.Y. In the aftermath, hundreds of thousands were left without power, as power lineswere left underwater, trees littered the streets and tore lines from the poles, homes were washed away andflooded, and daily life was turned on its head. Some chose to heed the warnings of the authorities andremained with their properties, refusing to vacate what they have spent their entire lives building up.

I was one who waited it out and faced four feet of water entering my home, heavily damaging the firstfloor, and taking out three cars in the process. Power outages spread as and electric sub-station blew up ahalf-mile away from my home, lighting the darkened skies. Transformers were knocked off poles and wereleft useless as they too were submerged in the waters brought ashore by Sandy. An Islandwide gas short-age then gripped the area as gas pumps were left without the power to pump gasoline, the same gas need-ed by utility crews to get into the most impacted areas and by homeowners who required this resource topower their generators to get them through the early winter chill. Fuel was scarce and hard to find as asimple trip to the gas station became a two to three hour ordeal. For some, the wait proved fruitless as sta-tions often ran out of fuel and three hours spent lined up was all for nothing.

Nearly two weeks after the storm, thousands still remain without power, but have hope. Entire communi-ties, decimated by the storm and left with little resources, have banded together to lean upon one anotherin a time when solid answers from the government and power companies are few and far between. Thesecommunities have banded together and have begun the regrowth process, a process that begins by sadly toss-ing to the curb, lifelong memories that are water-damaged beyond recognition and repair.

Amidst the doom and gloom and red tape I have personally have had to contend with in rebuilding myown life, my faith in mankind is being restored. Right under my own nose, the employees of NMP MediaCorporation have banded together to still put out a quality product despite the many obstacles continual-ly thrown in our path. We share the common motto of “the show must go one” and continue as a groupwhile our team works on their own individual re-building projects. We have worked around the clock, fromhome, from cars, from powered coffee shops with WiFi connections, and using any means necessary to con-tinue to bring you, our faithful readership, a quality product that will remain unscathed by even thedestructive path of Mother Nature. I applaud my team for taking the time out of their own personal recov-ery missions to work toward this common goal of providing you with the latest industry news and knowl-edge geared toward enhancing your bottom line. As we go to print with this issue, my office and home arestill without power for a solid two weeks. In order to get this issue completed, our office has been poweredby three heavy-duty extension cords plugged into an adjacent gas station.

Rebuild and regrowth …And as I personally have started on the path to rebuild my life after Hurricane Sandy, NAMB—TheAssociation of Mortgage Professionals is set to help you take your business to the next level, Dec. 8-10 atthe MGM Grand in Las Vegas at their 2012 NAMB National event. Booth space is nearly sold out and a fullslate of speakers has been lined up, including Greg Frost, Spencer Rascoff from Zillow, Ted Tozer of GinnieMae, Lawrence Yun of the National Association of Realtors (NAR), and much much more. For more infor-mation, see this month’s NAMB Perspective column on page 22 or visit NAMBNational.com.

I hope to see you all in Vegas, as for me, NAMB National will be a celebration … one that shows me theindustry is headed toward normalcy while the regulatory landscape shifts, but a celebration of life and justwhat really matters in this world. Community, family and the will to pick up the pieces and once again riseabove adversity are what I will be celebrating both while at the dinner table on Nov. 22nd and in Las Vegas.I feel constricted by the confines of this column space to detail all that I have experiences, but I urge youto contact me at [email protected] if you have a story to share about overcoming the odds and re-inventing yourself.

Happy holidays and may this holiday season bring out the best in you,

Joel M. Berman, Publisher-CEONMP Media [email protected]

National Mortgage Professional Magazineis published monthly by NMP Media Corp.

Copyright © 2012 NMP Media Corp.

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The Association of Mortgage Professionals

2701 West 15th Street, Suite 536 � Plano, TX 75075Phone #: (703) 342-5900 � Fax #: (530) 484-2906

Web site: www.namb.org

Donald J. Frommeyer, CRMS—PresidentAmtrust Mortgage Funding Inc.200 Medical Drive, Suite D � Carmel, IN 46032(317) 575-4355 � [email protected]

John Councilman, CMC, CRMS—Vice PresidentAMC Mortgage Corporation11920 Fairway Lakes Drive, Suite 2 � Fort Myers, FL 33913(239) 267-2400 � [email protected]

Fred Arnold, CMC—TreasurerAmerican Family Funding24961 The Old Road, Suite #101 � Stevenson Ranch, CA 91381(661) 284-1150 � [email protected]

Kay A. Cleland, CMC, CRMS—SecretaryKC Mortgage LLC200 South Wilcox Street #224 � Castle Rock, CO 80104(720) 810-4917 � [email protected]

Jim Pair, CMC—Immediate Past PresidentMortgage America Corpus Christi Inc.22800 Bulverde Road, Apt. 1402 � San Antonio, TX 78261(361) 774-7314 � E-mail: [email protected]

Rocke Andrews, CMC, CRMS—DirectorLending Arizona LLC1996 North Kolb � Tucson, AZ 85715(520) 886-7283 � [email protected]

Rick Bettencourt—DirectorMortgage Network300 Rosewood Drive � Danvers, MA 01923(978) 777-7500 � [email protected]

Donald E. Fader, CRMS—DirectorSMC Home FinancePO Box 1376 � Kinston, NC 28503-1376(252) 523-5800 � [email protected]

Andy W. Harris, CRMS—DirectorVantage Mortgage Group Inc 15962 SW Boones Ferry Road, Ste. 100 � Lake Oswego, OR 97035 (503) 496-0431, ext. 302 � [email protected]

Olga Kucerak, CRMS—DirectorCrown Lending328 West Mistletoe � San Antonio, TX 78212(210) 828-3384 � [email protected]

Linda McCoy—DirectorMortgage Team 1 Inc.6336 Piccadilly Square Drive � Mobile, AL 36609(251) 650-0805 � [email protected]

Dick Morin—DirectorConsumers First MortgageP.O. Box 918 � Kennebunk, ME 04043207-985-2895 � [email protected]

Valerie Saunders—DirectorRE Financial Services13033 West Lindburgh Avenue � Tampa, FL 33626(866) 992-0785 � [email protected]

John Stevens—DirectorBank of England d/b/a ENG Lending11650 South State Street, Ste. 350 � Draper UT 84020(801) 427-7111 � [email protected]

Donald J. UngerPresident(303) 670-7993, ext. [email protected]

Daphne LargeVice President & Treasurer(901) [email protected]

Tom ConwellEx-Officio & Legislative Chair(800) 445-4922, ext. [email protected]

Nancy FedichDirector–Conference Chair(908) 813-8555, ext. [email protected]

Judy RyanDirector-Strategic AllianceChair(800) 929-3400, ext. [email protected]

Susan CataldoDirector–Education & Compliance Chair(404) 303-8656, ext. [email protected]

William BowerDirector–Tenant ScreeningChair(800) [email protected]

Mike BrownDirector–Technology Chair(800) 925-6691, ext. [email protected]

Maureen DevineDirector–Education & Compliance Co-Chair(413) [email protected]

Renee EricksonDirector–New Membership & Elections Chair(800) 311-1585, ext. [email protected]

Terry ClemansExecutive Director(630) [email protected]

Jan GerberOffice Manager/MembershipServices(630) [email protected]

PresidentCandace M. Smith, CME(512) [email protected]

President-ElectJill Kinsman(206) [email protected]

Senior Vice PresidentChristine Pollard(607) [email protected]

Vice President—Central RegionKelly Hendricks(314) [email protected]

Vice President—Eastern RegionKatrica J. Driscoll, MML, CME, CMI(919) [email protected]

Vice President—Northwestern RegionDebbie Tofte, GML(425) [email protected]

Vice President—Western RegionLyman King III, CMI, CME(916) [email protected]

SecretarySara Vasura(703) [email protected]

TreasurerJeanne Evans, CME(918) [email protected]

ParliamentarianHulene Works(972) [email protected]

NAMB 2012-2013 Board of Directors

National Association of ProfessionalMortgage Women

P.O. Box 451718 � Garland, TX 75042Phone #: (800) 827-3034 � Fax #: (469) 524-5121

Web site: www.napmw.org

2012 Board of Directors & Staff

National Credit Reporting Association Inc.701 East Irving Park Road, Suite 306 � Roselle, IL 60172

Phone #: (630) 539-1525 � Fax #: (630) 539-1526Web site: www.ncrainc.org

National Board of Directors 2012-2013

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By Al Crisanty

The old expression “the cream always rises to the top” ispopular because it’s a truism—in business, much like ona dairy farm, the most highly valued components rise upor stand out because of their inherent qualities. In themortgage industry, we have always seen this truism in

practice. The best and the brightest, whether in sales, operations or lead-ership, have always found their way to the top. The industry rewardsachievement, and does so without delay. With the “Great Shakeout” thathas taken place in the mortgage industry it can easily be argued that“only the cream remains.” However, even now we should seek to sur-round ourselves with the best of the best, or the “cream of the cream” ifyou will.

Excellence is rewarded by customers, employees and vendors. Onekey to creating a culture of excellence is to first and foremost identifyand hire only the best team members. This is one area that should neverbe compromised. Focus on identifying key soft skills, such as integrity ofcharacter, work ethic, team/collaborative spirit and, last but not least,passion! I have found these to be more significant factors in predictingindividual success than anything else. You will also need to properly“incentivize” those with whom you work. For incentives to be truly effec-tive, they must clearly drive the behavior that you are seeking. Let meillustrate with an example.

Leading wholesale lenders seek to work with the top tier of brokers inthe industry—the best of the best or the top 20 percent. Even as stan-dards for quality loan submission have been raised well beyond wherethey were just a few years ago, the leading firms desire and strive for aneven higher level of quality in the files being submitted. Where a typicalloan file might require four or five “touches” or actions to be taken bystaff, a best practice goal might be to reduce the number of touches totwo or three per file. In order to achieve this goal it is necessary to alignincentives for team members and brokers with this desired result.

Wholesalers typically maintain a broker model or scorecard for eachof their broker partners. The model represents the ideal performancecharacteristics they are seeking and measures the actual, historical per-formance of an individual broker against that ideal. The system keepsup-to-date metrics on the performance of all files received from thatbroker. Those brokers that score the highest often receive benefits thatmight include having their files routed straight to underwriting, and pos-sibly designation for faster decisioning. This is a tremendous benefit tothe brokers that receive it, but it is earned by their history of exception-al performance. In this manner incentives can be aligned with the out-comes being sought.

Such a system drives excellence, accountability and loyalty, which areattributes that we believe are essential to success in the new mortgageindustry. They are the proper counterpoints to mediocrity and risk whichwill lead a firm or an individual quickly out of business, or into a newline of work.

We all must make choices in this industry about those with whom wework, and how we get the best out of those relationships. Our firm andmany of our competitors have staked out a position that we desire towork with the highest caliber brokers in the industry. We have devised asystem and process that expects a lot—but offers even greater returns.The end product for firms pursuing this approach, for their broker part-ners and consumers, is an unprecedented customer experience drivenby a productive and efficient origination process.

Al Crisanty is vice president of national wholesale production for 360Mortgage Group and is responsible for overseeing regional sales managersas the company seeks to expand operations to all 50 states. Formerly thenational wholesale director for Caliber Funding, Al was responsible for thedevelopment and expansion of Caliber’s wholesale production channel.Additionally, Al served as executive vice president of national productionfor American Home Mortgage, successfully transitioning the 500-memberproduction team from Capital Commerce Mortgage Company. Al may bereached by phone at (916) 761-1624 or e-mail [email protected].

SPONSORED EDITORIAL

The Creamof the Cream

It’s no surprise that many of us arefeeling a little overwhelmed withthe current state of the industry.

Market share opportunities have neverbeen better and interest rates havenever been lower. While the volumeand business is something to celebrate,the regulatory restraints and demandscan become overwhelming. Everythingtakes longer and requires more educa-tion for those who were accustomed toold times. Having strategies and sys-tems in place for pipeline managementis vital, but there is no doubt that withnew applications and existing approvalmanagement, things can become over-whelming at times.

While it is easy to feel that there isnot enough time during the day to getthings done, it is important to stepback, put things into perspective, andidentify what is really essential. Puttingthings into perspective while also tak-ing short breaks will allow you to thinkmore clearly and organize workflow tomaintain efficiency. Knowing what isabsolutely essential can avoid burnoutby focusing on these items and gettingthem done.

A few simple ways to reduce theoverwhelmed feeling:

� Designate time each day for a break� Modify environment (enjoyable,

music, etc.)� Write down thoughts or goals for

the day� Delegate what you can

Overcome Being Overwhelmed

� Have consistent and productivemeetings with operations team

� Communicate often� Work out and eat healthy� Don’t be naive about new regula-

tions, stay informed and prepared

Stay motivated and be thankful foropportunities. It is a great time to be amortgage professional. The opportunitiesare endless, but adapting to a world thatcan be overwhelming at times is required.More changes can bring more stress, butadaptation and preparation are vital keys.

Tip of the month …We all need the reminder that familymatters most. Get out of the office asmuch as possible and keep a healthybalance between your personal andprofessional life. Work to live and don’tlive to work.

Andy W. Harris, CRMS is president andowner of Lake Oswego, Ore.-based VantageMortgage Group Inc. and 2010-2011 presi-dent of the Oregon Association ofMortgage Professionals. He may bereached by phone at (877) 496-0431 or e-mail [email protected] visit AndyHarrisMortgage.com.

“Life moves pretty fast. If you don’tstop and look once in awhile, you

could miss it.”—Ferris Bueller

calendarNATIONAL MORTGAGE PROFESSIONAL

OF EVENTS

To view or submitan entry,see page

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NAMB Forms StrategicPartnership With The BondExchange

N A M B — T h eAssociation of Mort-

gage Professionals has announced that anagreement has been reached with MasonGrashot of The Bond Exchange to becomea Strategic Partner in offering mortgagelicense bonds to all NAMB members andtheir companies.

“NAMB Members have been requestingan exclusive provider with NAMB for bondsof all types, and I think that The BondExchange will be able to fill that void withtheir national focus on surety bonds with aspecific expertise in state mortgage licensebonds,” said Donald J. Frommeyer, presi-dent of NAMB. “In addition, they can facil-itate commercial insurance coverages suchas property, general liability, workers com-pensation, employment practices liability,and errors and omissions insurance.”

Under the terms of the partnership, TheBond Exchange will provide bond under-writing in all 50 states and will be able tocoordinate services between regulators,licensees and providers consistent with anational agency. The Bond Exchange hashistorically positioned themselves as anadvocate for the licensees by negotiatingbond pricing lower than or equal to othercompanies in the industry.

“By concentrating on surety bonds, TheBond Exchange understands the mortgagebusiness, respects the need for responsive-ness and provides a superior level of servicethat NAMB members may not be accus-tomed to receiving elsewhere,” saidFrommeyer. “The relationship that thisagreement now affords our membership, asa benefit and value to the Association, showshow NAMB is constantly committed toimproving and helping all of our members inevery aspect of their current everyday busi-ness. We are excited about this great rela-tionship and the value that it will provide toboth the Association as well as its members.”

United Wholesale MortgageSees 62 Percent QuarterlyVolume Jump

United WholesaleMortgage (UWM)has announced thatit grew its residen-tial lending volume

from $1.245 billion in the second quarterof 2012 to $2.019 billion in the third quar-ter, a 62 percent quarterly increase.

“The immense growth that we are expe-riencing is a direct result of the second-to-

none service that is provided to our bro-kers, coupled with the innovative productsand aggressive pricing we offer,” said MatIshbia, president of United WholesaleMortgage (UWM). “Our companywidemantra is ‘Lending Made Easy,’ which is asteadfast commitment we make to ourbrokers in an effort to continually and con-sistently ensure that doing business with usis incredibly simple. At the rate we aregrowing, UWM is well on its way to becom-ing one of the top five wholesale lenders inthe country.”

Throughout 2012, UWM launched sev-eral new products, programs and tools thathave been key in driving its growth, whichinclude: the innovative ELITE program forconventional products; ‘The Big and Easy,’a true jumbo loan product on up to $2.5million; HARP 2.0; the implementation ofHARP 2.0 with up to 175 percentLTV/Unlimited CLTV with DU; USDA prod-ucts; and enhancements to its broker por-tal, EASE.

In addition, UWM regularly holds edu-cational Webinars for its brokers on indus-try trends, new products, effective sales andmarketing strategies, and more. UWM alsoestablished and continues to build upon asuperior, uniquely formed internal salesforce model that engages in ongoing indus-try education and support for brokers.

UWM doubled its employee head countand has plans to hire another 400 over thenext 12 months. The company will be relo-cating to a larger corporate headquarters inMetro Detroit by end of year to accommo-date growth.

ICON Residential LendersSold to Rushmore LoanManagement Services

Grand Bank NA hasannounced that it hassigned an agreement

with Rushmore Loan Management Servicesin which Rushmore will purchase the busi-ness of Grand Bank’s ICON ResidentialLenders unit. Terms of the transaction werenot disclosed. Irvine, Calif.-based ICON is anational wholesale mortgage originatorand servicer which sources loans through anationwide network of more than 1,400mortgage brokers. The company is anapproved Fannie Mae seller and servicerand Ginnie Mae issuer of mortgage-backedsecurities (MBS), and has a strong FHA andVA niche loan business.

“This sale will allow Grand Bank to focuson building our core community bankingbusiness, which will benefit our existingshareholders and customers,” said Mark A.

Sponsored Editorial

By Melanie A. Feliciano Esq.

The Consumer Financial Protection Bureau (CFPB) recentlyextended the comment period for certain provisions of theproposed rule regarding the integrated disclosures underthe Truth-in-Lending Act (TILA) and the Real Estate

Settlement Procedures Act (RESPA) and certain provisions of the pro-posed rule regarding changes to the high-cost provisions of Regulation Z,implementing amendments to TILA made by the Dodd-Frank Wall StreetReform and Consumer Protection Act (Dodd-Frank Act).

Regarding the integrated TILA and RESPA disclosures, comments weredue for two aspects of the proposed rule on Sept. 7: the changes to thedefinition of the finance charge and the delay of the effective date forcertain disclosures required by the Dodd-Frank Act, which would other-wise be effective on Jan. 21, 2013. Note that with respect solely to theproposed changes to the definition of the finance charge, the commentperiod has been extended to Nov. 6, 2012, as announced in the CFPB’snotice of extension of the comment period, dated Aug. 30, 2012. Thecomment period for certain Dodd-Frank disclosures ended on Sept. 7,2012, as initially set by the CFPB.

Regarding proposed changes to the high-cost provisions of RegulationZ, as well as homeownership counseling amendments to TILA and RESPA,comments were due for the entire proposed rule on Sept. 7, 2012.However, on Aug. 31, 2012, the CFPB announced an extension of thecomment period until Nov. 6, 2012, for only that portion of the proposedrule that addresses the proposed changes to the Home Ownership andEquity Protection Act of 1994 (HOEPA), specifically regarding whetherand how to account for the implications of a more inclusive financecharge on the scope of HOEPA coverage.

Any final rule on the above two issues will certainly have an impacton certain high-cost tests, including Section 32, compliance audits andthe APR calculation.

Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and current-ly serves as editor-in-chief of DocMagic’s electronic compliance newsletter,The Compliance Wizard. She received her JD from the GeorgetownUniversity Law Center, and is licensed in California and Texas. She may bereached by phone at (800) 649-1362 or e-mail [email protected].

CFPB ExtendsComment Period for Two Proposed

Rules

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to establish uniform and efficient processesin those channels, and will coordinate byway of centralized software. The systemalso includes extensive quality controlmonitoring mechanisms. Coester VMS islicensed in all states requiring appraisallicensing, and has a presence in all 50states.

“Working with Coester VMS will allow usto improve the speed, efficiency and quali-ty of our valuation services,” said FGMCChief Executive Officer Andrew Peters.“More importantly, the software platformused by Coester will bolster our complianceefforts.”

Coester VMS CEO Brian Coester praisedFGMC for its willingness to invest in the cen-tralization. “We’ve seen time and timeagain that a lender willing to put the invest-

ment into its appraisal system reaps anexcellent return and sees significantimprovement,” said Coester.

Ocwen to Acquire MortgageServicer HomewardResidential Holdings

Ocwen FinancialCorporation and WL Ross &Company LLC haveentered into an agreementwhere Ocwen will acquire

Homeward Residential Holdings Inc.,including its various residential mortgageloan servicing and origination operatingsubsidiaries, for approximately $588 mil-lion in cash and $162 million in Ocwen

continued on page 10

Wolters, president and CEO of Grand Bank.The closing of the transaction is subject

to regulatory approvals as well as other cus-tomary closing conditions, and is expectedto close in the fourth quarter of 2012 or thefirst quarter of 2013.

“We are excited to have this opportuni-ty, as ICON’s business is a good complementto Rushmore’s existing mortgage business,”said Terry Smith, CEO of Rushmore. “We willbe working closely with ICON’s manage-ment team to ensure a seamless transitionfor customers and employees.”

Grand Bank also announced that it hasappointed Andrew Pollock as CEO of ICONeffective immediately, a position that waspreviously unfilled. Pollock was previouslythe president and chief administrative offi-cer of First California Mortgage Company,responsible for the successful turnaroundand expansion of the organization. He wasalso the president and CEO of First Franklin,a Merrill Lynch subsidiary. Pollock hasextensive experience in mortgage banking,wholesale mortgage originations, mergersand acquisitions, and leading quick growthinitiatives.

“There is significant untapped potentialat ICON, and I look forward to workingclosely with the existing management teamto add value, expand the business, andclose the transaction with the Rushmoremanagement team,” said Pollock.

Secure Settlements FormsStrategic Alliance WithCapital Markets Cooperative

C a p i t a lM a r k e t sCooperative(CMC) has

announced a strategic alliance with SecureSettlements Inc., an independent evalua-tion and risk management firm based inNorthern New Jersey. Under the agree-ment, Secure Settlements will offer CMCmembers its third-party closing agent riskmanagement program under special termsfor them and their agents.

“We’re excited to have SecureSettlements as a Cooperative partner,” saidTom Millon, president and CEO of CapitalMarkets Cooperative. “With the CFPB andother regulators expecting more proactivethird party vendor management, partner-ing with Secure Settlements will give ourmembers comfort knowing they will berelying on a trusted source for the completedata needed to make intelligent choicesabout closing agents—before a wire issent.”

“A mortgage transaction is typically thesingle largest financial endeavor an individ-ual will ever undertake. Secure Settlementswants to limit the potential for fraud andnegligence during these transactions bycompiling information that enables lendersand consumers to make informed deci-sions regarding their partners at the closingtable,” said Andrew Liput, president andCEO of Secure Settlements Inc. “CMC mem-bers will benefit from this partnershipbecause Secure Settlements’ programallows them to outsource closing agent vet-ting and monitoring while gaining access tothe company’s data base of cleared agentsand its 45,000 person watch list, the mostcomprehensive in the industry.”

First Guaranty MortgagePartners With Coester VMSon Appraisal Services

First GuarantyM o r t g a g eCorporation

(FGMC) has announced that it will central-ize its appraisal and valuation operationsunder the guidance of Rockville, Md.-basedCoester Vendor Management Services(Coester VMS). FGMC is a national, full-ser-vice mortgage lending firm offering retail,wholesale, correspondent and capital mar-kets mortgage solutions to clients of varyingincome and credit types. Under the agree-ment, FGMC will use the national appraisalmanagement company to manage andoperate its appraisal services in all of itschannels. Coester VMS will work with FGMC

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By Jonathan Foxx

“If you can see the lightat the end of the tunnel,you are looking thewrong way.”—Barry Commoner

In the first part of this two-part series,1 Iconsidered the recent proposal, issuedby the Consumer Financial Protection

Bureau (CFPB) on August 17, 2012, whichcontains certain proposed rules govern-ing mortgage loan originations, especial-ly relating to Mortgage Loan Originator(MLO) compensation guidelines inRegulation Z, the implementing regula-tion of the Truth-in-Lending Act (TILA).Comments for this proposal were due byOct. 16, 2012.2

In that article, I discussed the SmallBusiness Review Panel, which was impan-eled to consider, among other things, theeconomic and regulatory impact of theproposal rules and obtain feedback fromrepresentatives of the small entities thatwould be subject to the rule.3 Whenpreparing the proposed rule and an ini-tial regulatory flexibility analysis, theCFPB is expected to consider this panel’sfindings and also public comments, ren-dering its final rules by January 2013.4

In this second part of the series, I willexplore the CFPB proposed rules(Proposals) in some depth, specifically theclarification of and expansion on existingregulations governing MLO compensationand qualifications.5 These Proposals clari-fy and expand existing regulations relat-ing to loan originator compensation andqualifications. They also promulgate newlaws. The Proposals are meant to imple-ment provisions of the Dodd-Frank WallStreet Reform and Consumer ProtectionAct (Dodd-Frank) governing MLO com-pensation.6

There are certain salient regulatorycompliance requirements implementedin the Proposals.7

The proposed rules concern andinclude:

� Restrictions on Upfront Points and/orFees

� Restrictions on Loan OriginatorCompensation

� Loan Originator QualificationRequirements

I will discuss the above-mentioned cat-egories included in and affected by theProposals.8 Afterward, I will provide cer-tain considerations regarding the poten-tial, effectuating outcomes inherent in

their implementation. The entirety of theProposals is quite extensive. In the contextof this article, I can only hope to providea broad sense of their implications.

Please keep in mind that, as is the casewith many aspects of legal and regulatorycompliance, these Proposals containmany mandates that reach across anextensive regulatory framework. Recourseto a competent risk management profes-sional is essential to obtain comprehen-sive guidance and reliable information.

Restriction onUpfront Pointsand/or Fees“Government is not reason; it is not elo-quent; it is force. Like fire, it is a dangerousservant and a fearful master.”—George Washington

The Proposals create a category, calledthe “zero-zero alternative” (Zero-Zero). Itis a contrivance that must be tooled withprior to a lender or a mortgage brokerbeing permitted to charge upfront pointsand/or fees.9 The Zero-Zero is an “alterna-tive loan” with no upfront discountpoints, origination points, or fees that areretained by the lender, broker, or an affil-iate of either.10 The Zero-Zero would notbe required if the consumer is unlikely toqualify for the Zero-Zero in the first place.

Using the Zero-Zero offers a safe har-bor in the following scenarios:

� Transactions involving a lender: A safeharbor is available if, any time prior toapplication for a loan containingupfront points and/or fees, the lenderalso provides a quote for a Zero-Zero.

� Transactions involving a mortgagebroker: A safe harbor is availableunder which lenders provide a mort-gage broker with the pricing for thatlender’s Zero-Zero products.

In the mortgage broker scenario, con-sumers would be given quotes based onthe Zero-Zero, as part of the availableloan options.

Offering the Zero-Zero “quote” prior totaking an application essentially makesthis metric into a creature that the CFPBhas named, somewhat enigmatically, an“informal quote.”

The CFPB plans to issue a final ruleusing the following decision parameters: � Whether a bona fide requirement

should be adopted “to ensure thatconsumers receive value” in return forpaying upfront points and/or fees, and

different options for structuring such arequirement.11

� Whether additional adjustments tothe Proposals concerning affiliate feeswould make it easier for consumers tocompare offers between two or morelenders.

� Whether to take a different approachconcerning situations in which a con-sumer does not qualify for a Zero-Zero.

� Whether a Zero-Zero’s quotes, terms,and conditions should be disclosed inadvertising and at the time that con-sumers are provided disclosures with-in three days after application.

Restrictions onLoan OriginatorCompensation“All I ask is the chance to prove that moneycan’t make me happy.”—Spike Milligan

The position promulgated in theProposals with respect to loan originatorcompensation may be bifurcated intooutright Bans and Refinements, andClarifications and Revisions. Let’s first takea look at the Bans and Refinements.

Bans and RefinementsThe CFPB would continue the general banon paying or receiving commissions orother loan originator compensationbased on the terms of the transaction(other than the loan amount).12 However,there are several revisions or “refine-ments,” as the CFPB coyly describes theseadjustments.

The refinement to the simmering con-troversy over “unanticipated increases” inclosing costs from non-affiliated third par-ties is resolved by allowing reductions inloan originator compensation under cer-tain circumstances.

Additionally, the ban remains in placeon loan originators being compensatedby both consumers and other parties.Here, too, there are refinements. Forinstance, the Proposals allow mortgagebrokerage firms that are paid by the con-sumer to now be able to pay their indi-vidual brokers a commission on the trans-action, so long as the commission is notbased on the terms of the transaction. Afurther refinement allows certain fundscontributed toward closing costs by sell-ers, home builders, home-improvementcontractors, or similar parties, when usedto compensate a loan originator, to beconsidered payments made directly to the

loan originator by the consumer.There are revisions to permissible con-

tractual agreements. The Proposals bangeneral agreements that require con-sumers to submit any disputes arisingfrom a loan transaction to mandatoryarbitration rather than filing suit in court.

A remnant of a long debated concernis resolved with respect to financing ofpremiums for credit insurance. TheProposals would ban such financingarrangements.

Clarifications andRevisionsClarification is provided for “proxy” com-pensation, that is, when a factor used as abasis for compensation is prohibited as a“proxy” for a transaction term. The clarifi-cation was sought by the Small EntityRepresentatives (SERs) on the SmallBusiness Review Panel, which urged theCFPB to use its rule-making authority toclarify when a factor used to determinecompensation for a loan originator is aproxy for a loan term.13 Although theCFPB did not believe that any departurefrom the approach to proxies is necessi-tated by Dodd- Frank, it also “under-stands there has been considerableuncertainty on this issue” and itsProposals contain clarifications meant toenable lenders and loan originators todetermine whether a factor on whichcompensation would be based is a proxyfor a transaction’s terms.

In the clarification, the CFPB statesthat a factor (that is not itself a term of atransaction originated by the loan origi-nator) is a proxy for the transaction’sterms if:

1. The factor substantially correlates witha term or terms of the transaction, and

2. The loan originator can, directly or indi-rectly, add, drop, or change the factorwhen originating the transaction.

Both aforementioned conditions mustbe satisfied for a factor to be considered aproxy for a transaction’s terms.

If a factor does not “substantially” cor-relate with a term of a transaction origi-nated by the loan originator, the factor isnot a proxy for a transaction’s terms.14

If the factor substantially correlateswith a term of a transaction (Step One),then the factor must be analyzed underthe second condition, whether the loanoriginator can, directly or indirectly, add,drop, or change the factor when originat-ing the transaction (Step Two). Thus, the

Loan Originator Compensation: Past is Prologue (Part II)


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“I spent several months researching differentcompanies and had all but given up when afriend, Jonny Fowler, asked me to take a lookat ACHL This company doesn’t just feel likehome, it IS home. Every time I need help Iget it, and more! And with an incrediblebranch opportunity it all sums up into 3words: Product, Service, and HOME!”

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heard on the street continued from page 7

convertible preferred stock. Homewardservices about 422,000 mortgage loans withan aggregate unpaid principal balance ofover $77 billion. Its loan origination busi-ness includes correspondent and retaillending and is focused solely on high-qual-ity Agency-conforming mortgages.

“The acquisition of Homeward signifi-cantly advances Ocwen’s twin strategicgrowth initiatives to add high return servic-ing assets to its portfolio and expand origi-nation capacity to provide for a sustainablesource of future growth,” said Ocwen’sExecutive Chairman William Erbey.“Homeward brings with it a global servicingplatform as well as a growing originationbusiness that is already operating at a $10billion annual run-rate after launching inlate 2011.”

Homeward was organized by WL Ross in2007 and is the result of several major plat-form combinations: American HomeMortgage Servicing, Option One MortgageCompany and a large servicing portfoliofrom Citi Residential Lending. After normal-izing for certain transition related expenses,the acquisition of Homeward by Ocwen isexpected to be immediately accretive toearnings per share.

“Homeward has been profitable in eachyear of its existence and has also been awonderful cash flow producer, distributingto us approximately $900 million of cashsince the initial investment,” said WilburRoss, chief executive officer of WL Ross.“Mortgage banking is a business of scopeand scale, and we believe that the com-bined company will fill the void created bythe ongoing departures of many banksfrom the overall industry.”

The definitive acquisition documentsprovide representations, warranties andcovenants that are customary for a transac-tion of this nature, as well as loss sharingprovisions relating to certain pre-closing lia-bilities. Subject to regulatory approvals, thetransaction is anticipated to close by yearend. Ocwen will not need to raise any addi-tional equity capital to close the transaction.

“Homeward has a well-deserved reputa-tion for excellence in the mortgage indus-try,” Ron Faris, CEO of Ocwen said. “We areexcited about the synergistic combinationof the attractive servicing portfolio and plat-form, as well as the origination platformwhich will provide organic growth and willfurther Ocwen’s ability to work with existingborrowers on refinancing opportunities.”

Mortgage Professionals toWatch� ICON Residential Lenders has named RJ

Arnett as executive vice president ofwholesale lending and Sean Finn areasales manager of the Midwest region forthe wholesale department.

� The Mortgage Bankers Association(MBA) has announced the election ofDeborah W. Still, CMB of Pulte MortgageLLC as its 2012-2013 chairman, EJ Burkeof KeyBank Real Estate Capital as exec-utive vice president, and Bill Cosgroveof Union National Mortgage Company

as vice chairman.� John Marler has joined Bay Equity

Home Loans as director of marketingand communications.

� Platinum Data has named Nima Oreizychief technology officer.

� Bruce Mullen has joined the LakeOswego, Ore. branch of PacificResidential Mortgage as a mortgagebanker.

� Real Estate Mortgage Network Inc.(REMN) has announced the additions ofBob Filiberto as managing director ofloan administration and Cindy Cook asvice president of loan administration.

� DocMagic Inc. has named TimAnderson head of its new eServicesDivision.

� Mortgage Success Source hasannounced the addition of RobChrisman as an advisor and contentprovider.

� David K. Stein, senior vice president,general counsel and co-founder ofResidential Finance Corporation (RFC),has joined the advisory board ofLenders One Mortgage Corporation.

� Brian Simon has been named chiefoperating officer for New PennFinancial LLC.

� WCS Lending LLC has named Lisa Tayloras its president and chief operating offi-cer, Sharon Bitz as a non-executiveadvisor, Brent Chapman as director oflending operations, and Kim Elsass asdirector of production operations.

� GSF Mortgage has named Tricia Crisseyand Zach Meier as loan officers in thefirm’s Brookfield, Wis. office.

� United Shore Financial Services LLC,parent company of United WholesaleMortgage (UWM), has named TimForrester as chief financial officer andKristin Hammond as executive VP ofcapital markets.

� ISGN Corporation has named AmitKothiyal as chief operating officer, PaulY. Imura as chief marketing officer andBadri Narrayen as chief humanresources officer.

� Tom Aarons has joined Open MortgageLLC as director of secondary marketing.

� Mark Fowler has been named chief rev-enue officer, vice president of produc-tion for Residential Finance Corporation(RFC).

Your turnNational Mortgage Professional Magazineinvites its readers to submit any informa-tion, events, passages, promotions, person-al or professional occurrences that seemappropriate and/or other pertinent data tothe attention of:

Heard on the Street/MortgageProfessionals to Watch column

Phone #: (516) 409-5555E-mail: [email protected]

Note: Submissions sent via e-mail are pre-ferred. The deadline for submissions is the 1stof the month prior to the target issue.

By Mason Grashot, CPA

What does this General IndemnityAgreement do? Should I actuallyread all of this?The Indemnity Agreement is one of the corner-stones of what makes surety bonds different fromother insurance policies. The Indemnity (holdharmless) Agreement allows the bond carrier to

recover assets from the indemnitors if the carrier is damaged by hav-ing to pay a claim to the obligee because of the principal’s failure tomeet the obligations of the bond. Each carrier has its own version ofthe indemnity agreement with its own terms and conditions. However,they are all constructed with the same purpose: To give the carrierdirect, express permission to recover damages. Depending on theamount of the overall bond exposure, the agreement can be as shortas one page or as long as a dozen.

I’ll sign on behalf of my company, but why doI have to sign personally? Why does my spousehave to sign? Why do the other owners have tosign? Why do my other business ventures haveto sign?In short, because the surety has been there/done that … once bitten,twice shy. Instead of playing the legal game of trying to determinewhat “shell” the assets may be hidden under in the event of a bondclaim, the surety industry simply will not play unless it’s according toits rules. Regardless of their choice of entity (LLP, LLC, S-Corp, C-Corp),most licensees are closely-held companies. This means that, whilethere may be a legitimate separation of business and personalfinances, decisions, etc. during the normal (happy/healthy) times, atthe end of the rainbow (when everyone’s got their hands in the pot ofgold) those individuals in control of the company can creatively movecash and other assets out of the company and into the control ofthemselves personally, their spouses, or even other business entitiesin which they have an interest. Ultimately, the surety carriers wouldlike the indemnity of anyone who has or could easily end up havingthe assets that are supporting their underwriting decision to go aheadand bond the principal.

Mason Grashot, CPA is president of The Bond Exchange, a national insur-ance agency focused on surety bonds with a unique specialty practice cen-tered on the mortgage profession. As the endorsed strategic partner ofNAMB—The Association of Mortgage Professionals, The Bond Exchangeservices thousands of surety bonds through programs designed specificallyfor the mortgage industry. For more information, call (501) 224-8895 orvisit www.thebondexchange.com.

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By Paul Anastos

As we celebrate our25th year in businessat Mortgage Master,we are proud to saythat we have not onlysurvived but thrived

during the unprecedented changes andturbulence our industry has experi-enced during the last several years.While many lenders continue to strug-

gle or shut their doors, we expect thisyear to rank as our most successful todate. Not only are originations expectedto increase to more than $7 billion in2012, a record for our company, but weare experiencing growth in every area ofour business. We have added more than120 employees in the last 12 months;just recently opened an operations cen-ter in Maitland, Fla.; are expanding ourcorporate headquarters space toaccommodate personnel growth; and

continue to strategically expand ourfootprint.

As I reflect back at where we havebeen and look forward to where we aregoing, I can clearly identify several crit-ical lessons we learned along the way.Each of these lessons contributed tohelping us withstand one of the mostdifficult periods in our industry’s histo-ry and come out of it positioned fortremendous growth and closer to ourgoal of becoming a business that is

among the premier financial serviceproviders in the country.

Build the very best senior management team you canThere is no question our exceptionalsenior management team has helpedus effectively navigate through theobstacles and challenges of recentyears. They are the nucleus of our busi-ness and have helped ensure our com-pany’s success from day one. When ourfounder, Leif Thomsen, started thecompany in 1988, he developed a clearvision that has been adhered to eversince. Our invaluable Chief OperatingOfficer and Head of Operations PattyRaymo joined the team in 1991. Earlyon, she understood the importance ofresponsible lending and helped us mit-igate risk throughout the years, master-fully steering us clear of sub-primeloans even when it was the trend withso many other lenders. Part of thisfoundation includes many individualswho have dedicated their careers toMortgage Master for well over a decade.To name a few, Marie Gill who success-fully manages our closing department,constantly exceeds our customers, loanofficers and expectations of our closingattorneys. Our Chief Financial OfficerDavid Harrington has a wealth of finan-cial services experience and hasbrought us to a whole new level from areporting and financial perspective. Inaddition, Shane Stanton has been withthe company for several years and hashelped add to the continued growthand success of our company. His maincontribution is through recruiting activ-ities and management coaching. Tobuild upon this strong foundation, wehave added industry veteran Don Henigas managing director of national salesthis year. Don’s experience in buildingsuperior sales organizations thatempower producers to deliver the bestpossible service is crucial to our growthgoing forward.

I don’t hesitate to say our team is thebest in the business. They are outstand-ing leaders that brought their ownexpertise and ideas to the organization.However they are able to collectivelywork toward one vision and truly believein always doing what is right for the com-pany, what is right for our employeesand what is right for our customers.

Never lose sight of yourbusiness modelWe have never wavered from our disci-plined, conservative approach, andhave lived by the same simple philoso-phy for the last 25 years. We believe inoffering our customers the best prod-ucts at the best price with the best serv-ice. We simply do not bite off morethan we can chew in any aspect of ourbusiness. During the recent industrymeltdown, we adhered to this sameapproach. We remained transparent,both internally and with our customers.We kept our overhead low allowing us

Still Standing: Lessons From a Survivor of theMortgage Industry Meltdown


13


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NOVEMBER 2012

MBA ResidentialOriginations in 2013 toBreak $1.3 Trillion Mark

The Mortgage BankersAssociation (MBA) ex-pects to see $1.3 tril-lion in mortgage origi-

nations during 2013, largely driven by aspillover of refinances into the first half ofthe year. MBA also upwardly revised itsestimate of originations for 2012 to $1.7trillion. MBA expects to see purchase origi-nations climb to $585 billion in 2013, upfrom a revised estimate of $503 billion for2012. In contrast, refinances are expectedto fall to $785 billion in 2013, down from arevised estimate of $1.2 trillion in 2012.

“We expected 2012 originations to befront-loaded in the first half of the year,with refis falling off with rate increases.Instead we saw the refinance market growduring the year due to a combination oflow rates, thanks to QE3 and slowing glob-al growth because of continuing problemsin Europe, and adjustments in the HARPand FHA refinance programs,” said JayBrinkmann, MBA’s chief economist. “Weexpect 2013 refinance originations to playout like our original expectations for 2012,with a long tail of refis extending throughthe first half of the year followed by a rapiddrop-off in the second half.”

Brinkmann continued, “In contrast, weexpect a 16 percent increase in purchaseoriginations in 2013 over 2012, with everyquarter in 2013 exceeding the same quar-ter of 2012. The increase in purchase vol-umes will be driven by continued modestgrowth in the economy, an increase inowner-occupied sales financed with mort-gages as opposed to cash purchases byinvestors, an increase in new home salesand a small increase in average homeprices. This assumes that changes in theregulatory environment during 2013 arenot unduly disruptive in terms of their con-straints on available credit, and FHA and/orFannie Mae/Freddie Mac do not notablytighten their credit policies. FHA and othergovernment programs accounted for 43percent of purchase originations in 2011and have been averaging 38 percent ofpurchase applications in 2012.”

“Mortgage rates are likely to stay belowfour percent through the middle of 2013,principally due to the announced ongoingpurchases of mortgage-backed securitiesby the Federal Reserve under its QE3 pro-gram. The Fed has committed to buying$40 billion of agency MBS per month untilthe labor market shows significant signs ofimprovement. Based on MBA’s originationsestimate, the Fed will be buying 36 percent

of all mortgages originated in 2013, and amuch higher percentage of those swappedinto agency MBS. Given our expectationthat originations will be front-loaded inthe first half of 2013, the Fed’s purchasesduring the second half of 2013 couldapproach 50 percent of all mortgages orig-inated in the last six months of the year,obviously with the effect of holding downrates, although there is a possibility thatthe Fed could shift into Treasury securitiesbefore the end of 2013.”

“The originations forecast is based onexpectations of very modest increases ineconomic growth in 2013 relative to 2012,but growth nonetheless. We expect grossdomestic product to rise 2.0 percent in2013 versus only 1.6 percent in 2012,about equal to the growth rate in 2011 butwell below the 3.1 percent growth rate wesaw in 2010. The growth will be driven bya combination of the biggest annualincrease in residential fixed investment wehave seen since 1992, as well as smallincreases in consumer spending and busi-ness investment.”

“We expect the unemployment rate toremain around eight percent until themiddle of 2013, before falling to 7.8 per-cent by the end of 2013. The broadermeasures of unemployment that aremost predictive of the demand for hous-ing are likely to remain stubbornly high.Private sector job growth is likely toremain in the 125,000 to 150,000 permonth range, and while this would resultin an additional 1.5 to 1.8 million privatesector jobs created during 2013, thatgrowth is well below what we need for arobust market in home sales, construc-tion, and purchase originations.”

“Clearly the economy faces a number ofthreats and while none of these threats isfully reflected in our forecast, the forecastis negatively impacted by the dead weightof uncertainty over how these threats mayeventually be resolved. The most immedi-ate threat is the so-called ‘fiscal cliff’ whena series of large tax increases and spendingcuts are scheduled to go into effect auto-matically on Jan. 1, 2013 unless Congressand White House reach an agreement. Thetax increases in particular would be devas-tating to economic growth. We believe thatthe entire package of tax increases andspending cuts, if left unaltered, would cut3.5 to four percentage points from ourgrowth forecast.”

“While the fiscal cliff is the most imme-diate threat, it is at least one we can con-trol. The others are primarily international

NMLS

National Education

National Training

National Networking

NAPMW is a community of nearly 2,000 professionals across the Country who engage in the mortgage / banking industry. Men and women from all backgrounds have joined NAPMW because they want to excel at what they do. Employers who want excel-lence from their employees engage with NAPMW for up-to-date education. Both professionals and employers have found there is a place for them in NAPMW.

To Join NAPMW visit:

www.napmw.org

or call: 1-800-827-3034

Have Questions? Please

feel free to e-mail us at:

[email protected]

Organized for the purpose of providing education to profession-als in all phases of the mortgage industry, NAPMW offers educa-tion via many venues – seminars and workshops held around the country, on-line, and at its National Education Conference held each May.

NAPMW membership gives you exclusive access to timely educa-tion regarding the regulations affecting your career such as a FREE TO MEMBERS monthly webinar on industry updates AND our 8 hour NMLS continuing education class offering (NMLS Provider # 1400309)

If you believe in helping to elevate the educational standards of this industry, or assisting in developing the most competent industry work force, then you believe in NAPMW.

NAPMW is not a women’s organization. But since women make up the majority of professionals in the mortgage/banking profes-sion, our purpose is to help them advance in business, personal, and leadership development.

Coast to Coast Associations

Discounted Services

Industry Updates

Education

Networking

Leadership

Why NAPMW?Three Simple Reasons

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By Dave Hershman

Yes, this is a manage-ment column. But, aswe have pointed outtime and time again,you cannot be a greatmanager unless you

hire the right people. Or, to put itanother way … if you hire the wrongpeople, you will never become a greatmanager. We all know what to look forin a loan officer hire—a hard workerwho is an ethical, team player, and isprofessional, etc. Today, I would like toadd a critical one that many managersoverlook. Why do they overlook thisissue? Because they see loan officers assalespeople. Actually, I see them asCEOs.

When we counsel managers, wecounsel them to hire candidates thatunderstand that they are not apply-ing for a position but to start a busi-ness. The manager must make thesecandidates understand what invest-ment must be made for each individ-

ual. In effect, instead of advertisingin the help wanted section of thenewspaper, perhaps they should beadvertising in the “BusinessOpportunities” section.

I brought up this topic withNathan Burch, president of McLeanMortgage Corporation in Virginia,and Nathan agreed with this view.

“We invest a lot in each loan offi-cer we hire, from technology tolicensing to training and marketingsupport,” said Nathan. “Yet our mostsuccessful loan officers, by far, arethose who add to that investment sig-nificantly. There almost seems to be amultiplication effect.”

Before you hire a loan officer, askthem about how they have investedin their business. And remember thatinvestments do not include onlymoney. They include time, moneyand energy. Ask them to read the seg-ment below and then relate how itdescribes them.

Do you view yourself as a salesper-son? Or, do you view yourself as the

Are Your Loan Officers—CEOs?

CEO of your own business? If you real-ly want to lead the industry, you mustview your business as your company.That also means you must invest sig-nificant amounts of your money, timeand energy in your business. And youmust make this investment up front,not some time in the future.

For example, we cannot ell youhow many originators say, “I know Ineed this_____, but I need to close afew transactions first.” Then they gomonths or years without whateverthey need. They are running business-es that are always going to struggle.And most of them will eventually failbecause companies that are under-funded do not do well. If you haveworked for such a company, you knowwhat we mean in this regard. Thosewho are on “pay as you go” statusnever seem to reach the top. So hereis the basic question:

Are you investing what you need toin your business?

Imagine if you were opening aretail store or restaurant. You wouldinvest many thousands of dollars andhours before you rang up the firstsale. This would include hun-dreds of hours of researchand setting up the loca-tion. You would pur-chase equipmentand inventory.You may pay amulti-thousanddollar franchisefee. And when itwas opened, thehours needed torun the businesswould increase sub-stantially. In the end,you would still be in a sit-uation that poses a major riskbecause start-up businesses tend tohave a high rate of failure in the firstfew years.

Sales personnel do not necessarily

We have them! Do you?Because we bond thousands of mort-

gage companies across the countrywe use our buying power andleveraged competition among

multiple surety companies to offerunderwriting parameters andlower rates that other bond

agencies only wish they had.

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Trade in your overpriced bond fora new bond – And start savingmoney today!

have to invest as many hours or asmany dollars as one might starting arestaurant. But the concept is muchthe same. What do you need to investin? Marketing, education, technologyand more. Perhaps it is a laptop. Orit is the time to learn how to use asoftware program you have pur-chased for your laptop. Have youever purchased a software programand not learned how to use it? In thiscase you have invested the moneybut not the time. You must make aninvestment of all available resources.Imagine running a store without thetechnology you need. Imagine run-ning a doctor’s office without theknowledge you need!

The investment needed would varyfor each person and each company.For example, an insurance veteran ofeight years moving into the mortgageindustry would not need to learnabout available insurance coverage.On the other hand, someone movingfrom government should spend thetime to learn this aspect of the indus-try. After all, if you are serving home-owners and prospective homeowners,

you will need to become anexpert in all aspects of

the real estate andfinancing processes

so that you candeliver maxi-mum value toyour clientele.

Some willneed a homeoffice. Others

will need a mar-keting or process-

ing assistant. It isthis needs analysis

that is an all-importantresearch step. For example,

within the education category somemay need to learn how to better uti-lize a computer. Others may needhelp learning how to communicateverbally or in writing. Still others mayneed public speaking training.

Those who wait for their employ-ers to give them all the resources tobe successful will typically have along wait—forever. Success comesfrom within. And the key to this suc-cess is finding the right elements ofinvestment that are needed for eachindividual. These elements includetime, money and energy. You cannotmake it with just two out of three.Our question is … have you made theinvestment that is necessary to sus-tain and grow your business as thereigning CEO? There certainly is a bigdifference between an employee anda CEO!

Dave Hershman is a top author in themortgage industry with seven bookspublished, as well as hundreds of arti-cles. Dave has delivered hundreds ofkeynote speeches, seminars andschools for the industry as well. Hemay be reached by e-mail [email protected] or visitOriginationPro.com.

“Those who wait for their employers to give them all the

resources to be successfulwill typically have

a long wait—forever.”

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nmp news flash continued from page 16

and pose longer-term headwinds for theU.S. economy. These include the ongoingeconomic slowdown in the Europeaneconomies and how the fiscal problems insouthern Europe will be resolved; the slow-down in growth in China and the cascadingimpacts on Japan, Taiwan, Australia, NewZealand and the countries of southeastAsia; and the prospects of a war involvingIran and Israel and the response of theother countries in the Middle East and theimpact on world oil prices.”

FHFA Maps Out Four-Year Plan

The Federal HousingFinance Agency (FHFA) hasreleased an updatedstrategic plan for FHFA forfiscal years 2013-2017 sub-

titled, “Preparing a Foundation for a MoreEfficient and Effective Housing FinanceSystem.” The four strategic goals includedin the new FHFA plan are:� Safe and sound housing government-

sponsored enterprises (GSEs)—FannieMae, Freddie Mac and Federal HomeLoan Banks;

� Stability, liquidity, and access in hous-ing finance;

� Preserve and conserve Enterprise(Fannie Mae and Freddie Mac) assets;and

� Prepare for the future of housingfinance in the United States.“The initiatives and strategies set for-

ward in this plan will serve to improve cur-rent mortgage processes, inspire greaterconfidence among prospective market par-ticipants, and set the stage for recovery andan improved future system of housingfinance,” said Acting Director Edward J.DeMarco. “Working with the Congress, theAdministration and FHFA’s stakeholders, Iam confident that FHFA will meet the chal-lenge of building the foundation for asafer, more efficient, and effective systemof housing finance.”

The agency requested public commenton the strategic plan in May in accordancewith the Government Performance andResults Modernization Act of 2010.Preparing a Foundation for a More Efficientand Effective Housing Finance System alsoincorporates key components of FHFA’sStrategic Plan for EnterpriseConservatorships released in February.

Comergence: Less Than 10 Percent of MLOs inCompliance With AMLRegulations

As a new anti-money laundering (AML) lawwent into effect in the United States onAug. 13, Comergence has taken the lead inhelping lenders manage their mortgagelender’s compliance. The company has cre-ated a proprietary AML certificationprocess for their existing lender clients,along with reporting and analytics to track

which of their RMLOs have complied withthe law. For the first time, the globalFinancial Crimes Enforcement Network(FinCEN) will require non-bank mortgagelenders and originators to implement anAML program and file Suspicious ActivityReports (SARs) for certain loan transactions.FinCEN established this AML program inaccordance with the Bank Secrecy Act(BSA). The guidelines relating to the AMLrequirement became effective on April 16,2012, and the AML Program’s effectivecompliance date was Aug. 13, 2012.

“We estimate that only 7.4 percent ofthe country’s mortgage originators are cur-rently in compliance,” said Greg Schroeder,president of Comergence. Note that morethan 90 percent of all licensed mortgageoriginators are registered on theComergence system, and as of Sept. 26,only 7.4 percent of them have certifiedthat they are in compliance with the AMLProgram. “What’s alarming is that approx-imately half of the phone calls we receivefrom originators regarding this newrequirement is that they don’t even knowwhat the AML law is. We are working close-ly with all parties to bring them up tospeed quickly, and provide them with asolution that’s comprehensive, easy to use,and easy to manage.”

Until the Comergence software plat-form was created, lenders only had faxes,email, spreadsheets and paper files tomanually manage compliance withRMLOs. There had been no centrally man-aged platform available to manage a data-base of third-party originators. TheComergence system provides an electronicoverview and tracking of who is in compli-ance with this regulation, in addition to ahost of other features.

“The penalties for failing to comply withthe AML regulations are severe, whichinclude a lender’s responsibility to monitorits clients,” said Eddie Rodriguez, chiefcompliance officer at First MortgageCorporation. “First Mortgage Corporationappreciates and welcomes Comergence’sproactive effort to monitor each of ourclients by ensuring that they’ve compliedwith the new laws.”

LendingQB Study Finds 65Percent of Mortgage TechImplementations Result inFailure

LendingQB has revealedthe results from itsEnterprise ProcessAssessment (EPA),engagements withclients and prospects,which is a workflow

evaluation model designed that helpslenders make objective decisions on theirtechnology initiatives. LendingQB devel-oped the Enterprise Process Assessment(EPA) as a tool to help lenders fully under-stand the drivers that motivate technologyimprovement efforts.


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Become a NationalMortgageProfessional.com Blogger! It's free and easy. Just head on over to NMPMag.com, register and

follow the link in the upper right hand side of the page to become a blogger on our site today!

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Scenes From the MortgageBankers Association’s 99thAnnual Convention & Expo

October 21-24 at the Hyatt Regency in Chicago

Mike Allen, Steve D.Grant and CaryHarding of CreditPlus Inc. were onhand to discuss theircredit reportingtechnologies in theWindy City

Thomas Meyer and JeffDavis of Calyx Software onthe exhibit hall floor

Michael Morford, RonCarrillo, “Doc” the Bunny

and Norm Koenig fromDocMagic were on handto discuss their doc prep

solutions at the MBAAnnual Convention

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hand to discuss theircollateral valuation

management and decisionanalytics with attendees ofthe 99th Annual MBA Expo

Michael McDermott andCaitlin Hogan of StreetLinksLenders Solutions were onhand to discuss theirvaluation solutions

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Our culture has not only helped usattract some of the best but it has alsohelped us retain them, even duringtumultuous times. We currently employmore than 250 loan officers and areproud of the fact many have been withus for at least seven years. Twenty ofour loan officers were also namedamong the top 200 originators, by dol-lar volume, in 2011 according to anindustry listing of the top 200 origina-tors. We value our employees and knowthey genuinely enjoy working for us andwith each other. Our people want to be

still standing continued from page 12

a part of our team, they want to help usachieve our goals and they want to helpeach other succeed.

Embrace change … do not fear it or let it dictate your courseOver the last few years, we have consis-tently heard about lenders strugglingwith what may happen when rates startto increase or as regulations continue tochange. If you prepare yourself as acompany for the changes that areahead of you then those changes willnot prevent you from getting where youwant to go. Rates will eventually rise,and we know the regulatory environ-ment will continue to change.Successfully leading and managing

through these types of change requiresyou to always maintain a certain levelof preparedness. We have kept ouroperating costs low and over the lastfive years and have gained purchasemarket share every single year. Ourpurchase volume is currently 30-35 per-cent and we continue to grow thosenumbers.

The same preparedness needs to beapplied when considering regulatorychanges. It is impossible to determineexactly what may come down next, butwe know the rules will continue tochange over time. While there havebeen some good decisions, as well assome really bad ones, we do not let


to keep money in the business. Wenever grew too rapidly or panickedwhen change needed to be implement-ed quickly. Most importantly, we stoodby our founding principles, not focus-ing on quick profits but understandingand abiding by our fundamentals andlong-term growth plans. These corecomponents of our model remain inplace today and will continue to remainin place as we move forward.

Always rememberresponsible lending ismandatory for successWithout a doubt, many lenders failed inrecent years because they were origi-nating loans that just did not make anysense. We always steered clear of exoticand “liar loans” and never entered thesub-prime business at all. These werenot always easy or popular choices. As acompany, we experienced what it waslike to lose good loan originators, as wewere not following the product trendsat the time. This led some originators tomake the choice to work elsewhere. Itwas frustrating at the time, but refresh-ing later on to see some of those samepeople came back and sought us out.They came to understand our strongbelief and commitment to responsiblelending. They came to respect andappreciate that we were not going to letour originators, and our business, getinto trouble. In fact, to this day, we areextremely proud of the fact we havenever had to buy back a loan. We madea strategic decision to responsibly buildand grow our company, and regardlessof industry ups and downs, that willnever change.

A dynamic company culture can be the difference between success and failureThe dictionary defines dynamic as “vig-orous and purposeful, full of energy,enthusiasm and a sense of purpose,able both to get things going and getthings done.” That is the type of culturewe have built at Mortgage Master.Having the best and brightest workingfor you clearly makes a difference, andwe have always remained committed tomaking our company an attractiveplace to work. That is why we compen-sate our originators above and beyondindustry standards. Additionally, if wehold back any revenue from the loans,we tell them. We want them to under-stand and experience our transparency.If they join us, our goal is to have themextend that same level of transparencyto their customers. It represents whowe are, and supports our commitmentto responsible lending. We also makeourselves accessible at all levels,addressing concerns or problemsimmediately. We have open lines ofcommunication and do our very best toassist with the needs of our employees.

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By the timethat you arereading this, I

will have been presi-dent of NAMB—TheAssociation of Mort-gage Professionals fora year. A lot has hap-pened in with NAMB

over the last 12 months, and I amhappy to say that we are in so muchbetter shape today than back inNovember 2011. The Board of Directorsand all of the Committee Chairs havereally helped in getting us back ontrack and providing support to all ofthe mortgage professionals both mem-bers and non-members.

As we look to the NAMB NationalConference, we are starting to pull all ofthe final arrangements together andthe conference is already a big success.I cannot wait to see it all in line and theactual conference taking place andeveryone walking around, talkingabout how great they think the event is.At this time, we have more than 1,200registered for the event. My thanks goes

to John Stevens and his NAMB NationalCommittee, and Vince Valvo, executivedirector, for the outstanding job thatthey have done to make this confer-ence very successful. As this is our lastyear at the MGM Grand, we will needyour input as to where next year’sNAMB National should be held. If youhave an opinion, e-mail me at [email protected] or John Stevens [email protected] and let usknow. We are starting to work on 2013’sevent immediately following the con-clusion of this year’s event.

We have seen an increase in member-ship over the last 90 days from all of ourstate affiliates. Now is the time to startthinking about 2013 memberships if youare about to expire this year. If you are amember, I need you to go to all of yourfriends and loan originators in your officeand get them to join. When you stop tothink about what you get for the price ofmembership, how can you not join andhelp out. We use this membership moneyto work for you directly with the peoplein Washington, D.C. who control our des-tiny. We have, over the past 12 months,

developed a great rapport with theConsumer Financial Protection Bureau(CFPB) and the House Financial ServicesCommittee, the VA, FHA andCongressmen and Senators all trying towork together to make a difference.

This Delegate Council at the NAMBNational Conference is one of the mostimportant events of the year. We willelect those delegates who will overseenominations, awards and the by-lawsof the association. Only those whohave been past delegates, past stateboard members, and current dele-gates are eligible for these positionson these committees. So, make sureyou and your state Boards are comingto NAMB National so we can get thesecommittees filled and start to completetheir jobs.

I need to take a minute and let all ofyou know that one of the main objec-tives that I wanted to accomplish was tore-establish our NAMB for profit entity.NAMB PLUS was established in June tohelp with membership benefits and helpNAMB. We already had some companiesinvolved, including Liberty Mutual,Majestic Security, SPRINT, Lowes, andnow, The Bond Exchange. Don Fader isthe president of the NAMB Plus boardand has done an excellent job with hisgroup of people. A special thank you toGeorge Burkley from Indiana, KellyHamilton from Colorado, Nathan Piercefrom Utah, and Joel Berman from NewYork for all of their time and dedicationto this program. These members, alongwith John Councilman and Jim Pair com-plete this board and they are lookingaggressively for more companies thatNAMB can benefit from and the mem-bers also. As I write this article, a specialGET WELL to Don Fader who has undergone a medical procedure that will keephim down for about six to eight weeks.Don … please get well soon! If you haveany ideas, please e-mail Don at [email protected] or any NAMB Plus boardmember with your suggestions. We wantto make our benefits better for all mem-bers, whether you are a Platinum orSilver Member.

I have had a few inquiries from thestates about our two categories of mem-bership. Just so you know, everyone canbecome a Platinum Member or SilverMember, as long as you are one of thefollowing people in the NMLS system:

These are open to any individual in theresidential mortgage field dealingdirectly or indirectly with consumers,licensed as, registered as or exempt fromlicensing by their state.

As far as I know, that includes every-one from account executives for lenders

to processors, appraisers, title compa-ny employees, loan originators, own-ers, and everyone in between. Thereshould be no reason for anyone not tobe able to join. That is why we are“The Association of MortgageProfessionals.”

Ask your friends, your appraisers,your title companies and especiallyyour co-workers about joining. It is thebest way to show people that you careabout your career and your profession.Log on to www.joinnamb.org andbecome a member today!

As we look to the New Year, I wouldlike to take this time to wish all of youa Happy Holidays. I know that this isthe time of year when we get togetherand share time with friends and rela-tives. This is also the time that wereflect on what the past year hasbrought and we look to renew ourvigor and expectations for the comingyear. By now, we all know what theelection has brought us and whatdirection that the country is starting tomove towards. I know that no matterwho won the election, it is still achoice and challenge for all people towork together to make our professionone that is respected and againadorned by all customers. It is the timeto get involved and make a difference.We are a society of people motivatedby what we do and how we are lookedupon. Many changes will be comingour way over the next few months andwe must be prepared to work as ateam and together to make all of theplanets line up and be in sync. So,make sure you become active anddon’t sit on the sidelines. Be a positiveinfluence for all of your friends and co-workers and remember, we are all inthe mortgage family of life. Do yourpart!

Years ago, I was having a conversa-tion with my father, who was reallyinvolved with his trade association. Hewas president of the OhioPharmaceutical Association. I was talk-ing about all of the time he spent help-ing and fighting for things for the asso-ciation and he left me with this com-ment: “Those who can, do! Those whocan do more … volunteer!”

So, if you find yourself with 10 freeminutes, give one of our CommitteeChairs a call and volunteer. It will bethe best thing for your industry and itwill give you a little more purpose.

Happy holidays,

Donald J. Frommeyer, CRMS, PresidentNAMB—The Association of MortgageProfessionals

The President’s Corner: November 2012

Saturday, December 89:00 a.m. ....................Registration Opens

9:30 a.m. ....................Welcoming Remarks–NAMB Outlook, Presented byDon Frommeyer, President, NAMB —The Associationof Mortgage Professionals

9:45 a.m.-11:00 a.m.....“Steal This Idea” Roundtable Workshops

11:15 a.m.-Noon..........10 Tips on How to Run Effective Volunteer Boards

Noon-1:00 p.m. ..........Lunch on Own

1:00 p.m.-1:30 p.m. ....Leadership Development: How to Put Members onthe Path to Leadership Excellence

1:30 p.m.-4:30 p.m. ....NAMB Delegate Council Meeting

4:30 p.m.-6:00 p.m. ....Opening Reception & PAC Auction

Sunday, December 99:00 a.m. ....................Registration Opens & Exhibitor Setup Begins

10:00 a.m.-10:50 a.m. Opening Keynote Presentation: “Build Your Sales to aBillion Dollars!” Presented by Greg Frost

11:15 a.m.-Noon..........Concurrent Hands-On Sessions� Mortgage Success Track: Five New Trends Rocking Your Mortgage World,

Presented by Rick Sharga of Carrington Mortgage Services� The Next Great Thing Track: Growing in Reverse, Presented by Ralph Rosynek

of Reverse Mortgage Solutions� Compliance Track: Making Your Appraisal Management Relationship Work,

Presented by John Culbertson of AppraiserVendor.com� Maximum Growth Track: Creating a Vision for Maximum Growth, Presented

by Erik Janeczko, Rene Rodriguez Brad Korn and Stephanie York of MaximumAcceleration

Noon-1:00 p.m. ..........Lunch on Your Own

1:00 p.m.-1:45 p.m. ....Concurrent Hands-On Sessions� Mortgage Success Track: Mortgage Marketing 2.0, Presented by Rocky

Foroutan of Lender411.com� The Next Great Thing Track: How to Use Credit Counseling to Propel More

Closings, Presented by Doc Compton of Omega Credit Repair and CounselingServices

� Compliance Track: The Top 10 Problems With Loans, Presented by TommyDuncan, CMT of Quality Mortgage Services

� Maximum Growth Track: Clearing Obstacles and Seizing Opportunities,Presented by Maximum Acceleration Team with Lead Coach Stephanie Yorkand Ginger Bell

1:45 p.m. ..................Exhibit Hall Opens

2:30 p.m.-3:15 p.m. ....Concurrent Hands-On Sessions� Mortgage Success Track: Social Media Workshop … Walk Out Linked In � The Next Great Thing Track: How to Build Your Correspondent Business � Compliance Track: Reverse Mortgage Borrower and Lender Safeguards,

Presented by Anthony Lopes of Cambridge Credit Counseling Services andRalph Rosynek of Reverse Mortgage Solutions

� Maximum Growth Track: The Three Secrets of Solution-Based Planning,Presented by Brad Korn and Erik Janeczko of Maximum Acceleration withGreg Frost

3:30 p.m.-4:15 p.m. ....Concurrent Hands-On Sessions� Mortgage Success Track: Social Media Workshop … Walk Out Linked In � The Next Great Thing Track: Making the Move From Originator to Broker� Compliance Track: Don’t Get Washed Out … Money Laundering and You,

Presented by Chip Langley of Quality Mortgage Services� Maximum Growth Track: The Three Keys to Accelerated Performance ... Pro-

Action, Progress Focus, And Persistent Learning, Presented by Erik Janeczko,Greg Frost and the Maximum Acceleration Team

4:15 p.m.-6:15 p.m. ....Cocktail Reception in Exhibit Hall

6:30 p.m. ....................Apex Awards Dinner

Monday, December 109:30 a.m. ....................Attendee Registration Opens

9:30 a.m. ....................Exhibit Hall Opens & Breakfast in Exhibit Hall

10:15 a.m.-11:00 a.m. ..Keynote Speaker Series: William Matthews, Presidentof Nationwide Mortgage Licensing System

11:15 a.m.-Noon..........Keynote Speaker Series: Spencer Rascoff, CEO ofZillow.com

Noon-1:00 p.m. ..........Lunch Available for All Attendees in the Exhibit Hall

1:00 p.m.-1:45 p.m. ....Keynote Speaker Series: Theodore Tozer, President ofGinnie Mae

1:45 p.m.-2:30 p.m. ....Break in the Exhibit Hall and Grand Prize Drawings

2:30 p.m.-3:30 p.m. ....Keynote Speaker Series: Lawrence Yun, ChiefEconomist of the National Association of Realtors

3:30 p.m.-3:45 p.m. ....NAMB National Conclusion

4:00 p.m. ....................NAMB Board of Directors Meeting

NAMB National 2012Saturday-Monday, December 8-10

MGM Grand • Las VegasFor more information, visit http://nambnational.com.

Preliminary Agenda(Subject to change)

For more information, visit http://nambnational.com.

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By David Lykken

Another election has come and gone.Barack Obama has remained as the44th President of the United States

of America. On a national level, there ismuch work to be done. Our society is atug-of-war between opposing and evolv-ing values. Our economy hangs in thebalance between progress and utter dis-aster. The development of our society

and economy over the next four yearswill determine the true caliber of lead-ership that exists in our most recentlyelected president.

On a national level, though, thedirection of our country over the nextfour years—for the most part—is nowout of our hands … the die has beencast. The decision has been made. We

now can only wait to see what hap-pens. It’s time to shift our focus backto the foundation of leadership. Let’sstep back from thinking about ournation’s leader and home in on theleaders of our states and communities.We’ve heard enough about the “trick-le-down” effects that national policyhas on communities and individuals.Let’s talk about the bottom-up effectsthat individuals and communities canhave on the nation. It is now time fora discussion on local leadership.

The more local the political leader,the greater and more diverse theimpact he or she is likely going to haveon our businesses and organizations.Most of us pay more attention to theissues that are directly in front of us—the ones that influence us on a day-to-day basis. The more local the influ-encer, then, the more likely he or she isto affect issues that we value. From theperspective of the mortgage industry,there are specific issues at both thestate and city level that leaders cominginto office need to be prepared toresolve in order to ensure a more pro-ductive economy and more prosperoussociety.

Let us begin with the state. An issuethat has existed for some time and hassignificantly impacted the mortgageindustry is centered around foreclo-sures. Some states require judicialforeclosures while others permit non-judicial foreclosures. While there areother elements involved, the signifi-cant distinction between the two typesof foreclosures is that judicial foreclo-sures require court approval whereasnon-judicial foreclosures do not.

Many people mistakenly assume thatjudicial foreclosures favor borrowerswhile non-judicial foreclosures favorlenders. When we look at the unintend-ed consequences, however, judicialforeclosures harm both lenders and

borrowers. Yes, they make it harder forlenders to reclaim properties from bor-rowers who can no longer pay for them,but the increased risk for these lendersmakes it harder for other borrowers toafford mortgages.

Lenders in states that require judi-cial foreclosures must account for theslow turnaround time embedded in thepossibility of foreclosure from their bor-rowers. In Texas, a state that permitsnon-judicial foreclosures, both the min-imum amount of time for a foreclosureto be completed and the expectedamount of time for a foreclosure to becompleted is two months. In Illinois, astate requiring judicial foreclosures, theminimum amount of time for a foreclo-sure to be completed is seven monthsand the expected amount of time for aforeclosure to be completed is 10months.

What do these numbers mean? Aforeclosed house in Illinois is expectedto take five times as long to get backon the market as a foreclosed house inTexas. Lenders are less likely to lendwhen they know that potential fore-closures will be tied up in the courtsfor months on end. Political leaders instates that enact judicial foreclosurepolicies slow down the economies ofthose states. They are pandering toconstituents in order to save a smallsegment of their states’ populationswhile at the same time making invest-ment decisions harder for everyoneelse. This position is a clear example

The Importance of Local Leadership“... the direction of our

country over the next fouryears—for the most part—is now out of your hands ...

the die has been cast.”

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of bad leadership at the state level.Let’s go a little bit further, now, and

talk about leadership at the city level.Another key issue has been adverselyaffecting the mortgage industry since theonset of the housing crisis...and thatissue has to do with eminent domain.Eminent domain is the right of govern-ments to seize private property for thepurpose of creating some sort of publicgood. Traditionally, it has typically beenused to extend highways and set uppower lines. Private landowners are paidwhat is deemed a reasonable sum fortheir properties and the public benefitsfrom what is done with the land.

Recently, the right of eminent domainhas been used wrongly to prevent fore-closures. Certain cities, such asSacramento, Calif., are buying up“underwater” mortgages under the flagof eminent domain. This activity isanother prime example of pandering tosmall segments of the population atthe expense of the whole. There is nopublic benefit derived from the taxpay-er money being used to buy up theseprivate mortgages. Money is simplybeing wasted.

The bigger problem with using theright of eminent domain to buy upforeclosures is the unintended conse-quence it will have on the future.Governors and other city officialsimplementing these policies need tounderstand that this trend is going todramatically reduce home ownershipin the coming years. If foreclosurescontinue to be prevented, lenders aresimply going to stop lending. It’s basicmath. If they don’t believe that borrow-ers are going to be able to fully repaytheir mortgages, they simply aren‘tgoing to lend. If they do lend, the rateswill dramatically increase and fewerborrowers will be able to afford homes.

The story of homeowners losing theirhomes is a Hollywood favorite. It is astory often dramatized across all mediaand it’s easy to get people to fall for it.The story people often don’t see—thetrue story—is the one about borrowerswho can’t get loans because lenderscan no longer afford to give them. Badlocal leaders are simply destroying themarket. They are making it more diffi-cult for reputable lenders to lend andmore difficult for reputable borrowersto borrow. If local leaders continue tocater to the few at the expense of themany, this story is going to becomemore and more prevalent … and ourcommunities are going to becomemore and more destitute.

Now let’s shift the discussion fromwhat we look for in local leaders to whatwe aspire to be as local leaders. Those ofus in the mortgage banking industryhave both an opportunity and responsi-bility to use our voices to sway the leg-islative decisions being made in ourstates and communities.

Recently, a group of industry execu-tives flew to San Bernardino to have adiscussion with the town council. A pro-posal had been placed to use eminentdomain to fight the mortgage crisis inSan Bernardino and these executives

took action. They didn’t merely sitback and complain. They hopped ona plane and flew to San Bernardinoto meet with decision-makers andparticipate in the discussion. Thatproactive move is a gesture in posi-tive leadership.

You can do the same thing. Thereare opportunities to participate onboth a state and a city level. Chancesare, the very same issues discussed inthis article are impacting your busi-ness in some way. What are you goingto do about it? Are you voting peopleinto office that will eliminate barriersfor the industry and boost your localeconomy? Are you meeting withmembers of your town council to dis-cuss issues related to mortgage bank-ing, lending, and borrowing? If not,what’s stopping you?

It isn’t enough to watch the storyunfold. You must participate in it. Itisn’t enough to cheer on good leadersand berate bad ones. You must decidewhat kind of leader you are going tobe. Don’t just look for good leadershipin the activities of others; exemplify itin your own. The most local leader-ship that exists is the leadership youhave as an individual. How are yousetting an example for your industry?How are you setting an example foryour employees? How are you settingan example for your family? Are youdoing what’s popular for the few orare you doing what’s right for themany?

This is your time. If you don’t standup and speak out, you aren’t just goingto ruin the economy for yourself andyour business; you are going to doirreparable damage for the entireindustry. Inaction is often the greatestoffense. Your community needs you.Your state needs you. Even your coun-try needs you. The ripples you make inyour community will echo throughoutthe entire country. We are at a pivotalpoint in the history of the mortgagebanking industry. Now, more thanever, we need good leaders. It’s timefor you to be that leader. It’s time foryou to pave the way for progress.

In the end, the most significantelection is not who you’ve elected at anational, state, or local level. Themost important electoral decision youwill make is whether or not you electyourself. Vote yourself. Be the leader.We’re all waiting on the example youwill set for us.

David Lykken is president of mortgagestrategies and managing partner withMortgage Banking Solutions. He hasmore than 35 years of industry experi-ence and has garnered a national rep-utation, and has become a frequentguest on FOX Business News with NeilCavuto, Stuart Varney, Liz Clamanand Dave Asman with additionalguest appearances on the CBS EveningNews, Bloomberg TV and radio. Hemay be reached by phone at (512)977-9900, ext. 10, or [email protected] or [email protected].

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National Mortgage ProfessionalMagazine has taken the opportu-nity in the November 2012 issue

to focus on one of the industry’s topplayers in its “Mortgage Professional ofthe Month” feature. This month, we hada chance to speak with David Wind,Founder, CEO and Chairman of theBoard for Guaranteed Home MortgageCompany, an expanding mortgagebanker based in White Plains, N.Y. As anattorney, former clerk in the New YorkState Attorney General’s Real EstateFinance Bureau and a former mortgage-backed securities analyst with CitiCorp,David has one of the most intriguingresumes in the industry today. He recent-ly took time to speak with us about hiscareer and provide his perspective on theindustry today.

Tell me how you came to choose themortgage industry as a career, sinceyou began as an attorney?My interest in the mortgage businesswas a serendipitous one, when I attend-ed a closing representing the purchaserof a home as their attorney. At the clos-ing table, having spent a good six oreight hours working with the buyersand ensuring that everything wasnailed down–a check was slid acrossthe table to me for my services in theamount of $500 for what I consideredto be a pain-staking and herculean job;and another check for $8,700 was slidacross the table to a mortgage broker,who, in my opinion at the time, justearned slightly over an exponential ofwhat I had earned, and I had just gotout of law school. I thought to myself,“Maybe I should take a look at thismortgage business.” This was in 1994.

How has your experience as a lawyerhelped you in the mortgage business?The place it has benefited me most iswhen I spent time at the attorney gen-eral’s office ... experiencing what thefolks do who are responsible for regu-lating the industry. I recognized andrespected the folks within those agen-cies for what it is they had to do withsometimes unclear objectives. We’veall been dealing with unclear objec-tives since I’ve been in the mortgage

industry, but reasonableness typicallyprevails. My experience both as alawyer and as a regulator taught methat, in the end, reasonableness pre-vails because the people who adminis-ter those loans are themselves mostlygood, and that I’m capable of commu-nicating with them effectively.

You mention regulation. What areyour thoughts on the current regulato-ry environment in the mortgage indus-try? Is the industry over-regulated?I’m not going to take a position as towhether we’re over or under regulatedbecause I believe this is–in many cir-cumstances–the largest financialtransaction that a consumer will enterinto in their lives. There needs to be atremendous amount of focus by boththe legislators and the regulators onhow that is conducted. But what wedesperately need as an industry issome clarity as to how those regula-tions apply. We’d really appreciate

some instruction as to how to makesure that we’re acting compliantly.That is sorely missing.

You also spent time early in yourcareer as a bond trader. How has thatexperience helped you in the mort-gage industry?I’ve always been cognizant because ofmy experience at Citicorp on their trad-ing floor of the vicarious nature of atransaction. It’s given me tremendousperspective to know that the “Miller”loan for $100,000 will make its waydown a chain, number one, whereeveryone will have to take a bite inorder to earn a living; and number two,that everyone deserves a degree ofresponsibility as to the quality of thatparticular asset and all the other assetsthat are bundled together. It’s thatchain that broke down, and, of course,was one of the precipitating events thatcaused the meltdown that we all expe-rienced. So it has given me some unique

perspective as to how the old SchoolHouse Rock “I’m Just a Bill” song worksin the mortgage industry.

With your experience in the secondarymarket what are your thoughts regard-ing the potential for private alternativesdeveloping to the GSEs? I think, once again, we dovetail back toclarity and regulation. There are atremendous number of fairly sophisti-cated and well-funded entities andindividuals out there that are capableof putting together a viable alternativeto the agencies. What they’re frightenedabout–at least the cacophony that Ihear at the various functions that Iattend–is that they are all waiting tofind what a “qualified mortgage” trulyis, and whether their portfolio has anyliquidity. They are not going to dedicatesignificant human resources and capi-tal, only to find out that what they’vedone in the past is no longer viable andnot liquid.

The smoke signals are that theFederal Housing Finance Agency (FHFA)is going to begin to limit–again, it’s onlysmoke signals–the amount that anygiven institution can deliver to Fannieand Freddie based on some type of net-worth analysis. So, the example wouldbe that a company that has $7 millionin net worth would be able to deliver“X” during a given period of time, and acompany with $14 million in net worthcould deliver “2X” in a given period oftime. This is likely going to drive thecommunity mortgage bankers into theaggregators, which are the large institu-tions. We’re seeing the results in someof those smoke signals now as theselarger correspondent purchasers areunable to keep up with the volumethat’s being delivered to them and willonly become more exasperated asthings go on.

Are you involved directly with the regu-lators in trying to clarify rules?Guaranteed participates in a fairlyaggressive group that was lobbying onthe Hill. This group is comprised of 40-some private and community-basedlenders across the country. Together,working with both the Fed and working

David Wind, Founder, CEO and Chairman of the BoardGuaranteed Home Mortgage Company

B Y D A V I D J . C O S T E R

“I am proud of ourability, as anorganization, to beable to change theway we operate asthe environmentrequires, but thatour foundationalprinciples have notchanged.”

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with members of the ConsumerFinancial Protection Bureau (CFPB) andthe various conference boards of stateexaminers, we created a comp planwhich enables a firm’s–it enables mem-ber firms to fully defend the require-ments within the LO comp regulations,and also provides a fair amount of flex-ibility to the sales team.

What are you most proud of in yourcareer?I am proud of our ability, as an organi-zation, to be able to change the way weoperate as the environment requires,but that our foundational principleshave not changed. We are presently inthe process of creating an institutionthat is more bank-like, depositorybank-like, than ever before. We are amortgage banking firm that is takingseriously the requirements that havebeen placed upon us in regard to itemssuch as the Financial Privacy Act andthe anti-money laundering law. And weare requiring that all our staff completethese training programs and get certifi-cates. Four to five years ago, we neverwould have considered requiring theentire staff–including sales and supportteam members–to do things like this.But we recognize the new environmentthat we’re in, and we also understandthere’s a price to pay for being a leaderin these things because many of my col-leagues–I don’t call them competitorsanymore because there are so few of usleft–have not focused on this issue yet.

What might you have done differentlyin your career if you could do it overagain?What I would have done differently is Iwould have built a firm, and then Iwould have taken some of the offers wehad and cashed out. Then, I would havebuilt it again, and then, I would havecashed out. Fortunately, I live a fairlyconservative lifestyle, and I have thenecessary resources to carry this firmthrough the ups and downs. But when Ilook across the spectrum at many of mycolleagues who use that formula–where they built firms during the bigtimes and then stepped out and thenwaited for the trough and began again–they seem to be a little bit more –let’sjust say that they have full heads ofhair, and I use a razor.

What issues keep you up at nightregarding the mortgage industry?My major concern right now is basicallythe plaintiff’s bar–that we, as an indus-try, have yet to see the consumer-basedclass actions against the mortgagebanking industry. The remaining play-ers, who should be congratulated forrunning credible honorable firms, willpay the price for so many of those insti-tutions, the smaller folks, especiallythose who are no longer in the game.

Are there particular books or peoplethat have had a big impact on your life?I have done a substantial amount ofreading in my life, and I continue to bea voracious reader. I’ve also been

exposed to some great folks–entrepre-neurs and stalwart, conservativeinvestors. But the biggest impact any-one has ever had on me is my father.My father is a successful businessman inhis own right. He is a classic accountant-CPA. What he taught me as a child, andwhat he continues to counsel me today,is that you meet every obligation. Youcan do things by a handshake. You mustbe extraordinarily selective with whomyou do business. If you do all thosethings, everything will be fine. So that isthe practice that I conduct.

How is Guaranteed Home MortgageCompany different from its competitors?I would say that we have created an

environment here where we are lookingfor like-minded professionals to join,but we are no longer a place where loanofficers and other professionals cancome and go at their leisure. We aretaking the position that we are doingsomething special here, and we arelooking to the right candidates–not anyand all candidates.

We are different than many of myother colleagues–the communitylenders–in that we have a “large lawfirm,” a more institutional environment.I think that it makes us unique that wecan regularly invest with our loan officersand our managers, and we have thecapability to determine whether a partic-ular investment made sense or didn’t.

What else would you like your col-leagues in the industry to know?I am strongly encouraging my col-leagues at every level in this industry tobecome more actively engaged in theadvocacy of our careers. There are toomany of us who take for granted thatwhat we do for a living will remain “asis” without any effort. This is a call toarms of mortgage professionals toreach out to their legislators and maketheir point heard, whatever their pointis. I’d like to see more of that.

David J. Coster is senior editor of NationalMortgage Professional Magazine. He maybe reached by phone at (919) 559-2171 ore-mail [email protected].

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Member FDIC

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www.NambNational.com

Fun, Photos andFeatured Speakers At

NAMB NATIONALSunday-Monday, December 9-10, 2012

MGM Grand • Las Vegas, NevadaBy John Stevens

We’re creating a whole new, exciting NAMB Nationalconference, coming on Dec. 9-10 at the fabulous MGMGrand in Las Vegas. But don’t just take my word for it.Go to www.nambnational.com to see what’s in storefor you.

When you’re in Las Vegas, you’re in for fun. Actionis in the air, and the bright lights dazzle. But you don’t

have to be on the Strip to see that. We’re putting a dazzling photo studioright in the center of the NAMB National exhibition hall. Every attendeewho comes can get a free professional headshot taken, to use on yourwebsite, on your social media pages, in your advertising and on yourbusiness cards. That’s a $200 value, brought to you FREE as part of yourNAMB National registration.

And you’ll have plenty of places to use that professional photo, afterall you’ll learn at NAMB National. We’ve got an amazing day of hands-ontraining ready for you on Sunday, Dec. 9. Don’t just think about socialmedia – we’re going to build your sites for you! Want to know how tohandle the growing demand for reverse mortgages? We’ve got you cov-ered.

And on Monday, Dec. 10, get ready for a day of some of the top mort-gage leaders in the nation. Don’t miss our Featured Speaker series,including Bill Matthews, president of the NMLS, as he talks about licens-ing issues and concerns that affect us all. Meanwhile, Theodore Tozer willbe with us. He’s the man who oversees Ginnie Mae, the agency thatmakes the market for FHA and VA loans, and which is fast becoming thesecond largest secondary market for mortgages in the country.

If you’re looking for new wholesale or correspondent relationships,our Exhibit Hall is the place to be. And you’ll also find opportunities fornew mortgage origination software, lead retrieval, and closing servicesthat get your buyers in their homes faster – which also means faster com-missions for you.

There is no other national event for the loan origination communitythat is working so hard on your behalf.

Whether you’re looking for compliance guidance, for ways to find andclose more deals, for new products to offer your customers andprospects, you’ll find it when you join us in Las Vegas on Dec. 9-10.

It’s NAMB National. We’re bigger and bolder than ever before. We’remortgage professionals. And we’re roaring back!

John Stevens is chairman of the NAMB NATIONAL conference. He is a mem-ber of the board of NAMB – The National Association of MortgageProfessionals, and is branch manager for ENG Lending in Utah.

By Eric Levin

All individuals orgroups that support thestrategic growth of theproduction side of themortgage bankingindustry must make an

effort, daily, to put themselves in theshoes of the individuals where it all startsin this business—the originator. Sure, wecan all point to facets of the business thatexist prior to the originator’s effort—andby no means am I diminishing that value,but volume drives the bottom line and theoriginator drives the volume. In theHammerhouse LLC 2012 Core MortgageLending Components Survey, we receivedresponses that inform how an originatoror leader of originators feels about six keytopics that we refer to as “The Six CoreComponents” (Leadership, Culture,Business, Operations, Technology andGeography) in our industry. A snapshot ofthe results included:

Key positive responses tosurvey questions � 89 percent believe that compensation

at their firm is “fair and compliant”� 89 percent believe their firm’s pricing

is “consistent” and “competitive”� 88 percent believe their firm consis-

tently closes loans “on time”� 88 percent believe the relationship is

“excellent” or “acceptable” betweenoriginators, managers and leaders

� 85 percent believe that the reputationof their firm is “outstanding” or “good”

Key responses indicatingroom for improvement� 32 percent of professionals surveyed

believe that their firm’s technology“needs an upgrade,” is “inadequate”or “hurts my business”

� 28 percent of professionals surveyedbelieve that internal communicationsare “inconsistent,” “muddled,” “leftopen for individual interpretation” oressentially non-existent

� 24 percent believe their firm leader’svision is “unclear,”“illogical,” “discon-nected” or essentially non-existent

� 24 percent believe that originators have“insignificant,” “very little” or “no”impact on operations at their firms.

The questions and subsequent answersrelated in the survey are vitally importantto any self-evaluation. However, when anoriginator is serious about evaluating theirgoals and is committed to an active role intheir personal success there is one vitalquestion missing: Who Are You?

Think about this for a moment. Whenwas the last time you really lookedbeyond some of the obvious questionsrelated to the business and considered thereal foundation for any possible success… YOU? On a recent consulting call, I wastold by an originator that although he hada real desire to grow his business and hadspecific goals (more like outcomes … vol-

ume related, not strategy), he felt mostcompanies were pretty homogenoustoday. He said he felt that there was reallynothing special that could be added to histools and resources that would create valuefor him or his referral partners. As he com-mitted to additional time consulting weuncovered—that although his currentemployer’s business model was reallygeared towards Agent referral partners, hehad been unsuccessful breaking into thatreferral base. Moreover he admitted open-ly that he really didn’t “enjoy knocking onagent’s doors.” When we dug into WHY, theoriginator said the reason he got into thebusiness was due to a family friend thathappened to be a builder and introducedhim to the industry. He enjoyed workingwith builders, had builder contacts, andfelt comfortable rubbing elbows with thebuilder community. He LIKED it … thismotivated him. All that said, he had settledfor a business model whose CoreComponents did not match WHO he is.

As an advocate for the business and forthose “on the street” two things come tomind as we consider this level of evaluation.

� If you are a recruiter (external orInternal) of producers or a managerrecruiting producers in this business,you owe it to the originators you arerecruiting to think beyond the stats.Without the dedication and accounta-bility that comes with truly getting toknow WHO your “candidates” are, youwill never be able to truly IMPACT theirgoals, their business, and their lives.

� If you are an originator, ask yourself ifyou have a trusted partner that knowsWHO you are and can objectively con-sult with you on key topics that supportyour overall goals. This could be a pro-fessional coach or recruiter that is will-ing to invest the time necessary in aprocess of discovery with you and notsimply a transactional conversationresulting in the “possibility” of anemployment changing event.

Evolution is a constant is this industry.Markets change, regulations change andtechnology changes. However, through itall, most mortgage companies and/orbanks (depositories) will want you to bepart of their team simply because of yourproduction numbers. That which definesyou—that makes up the core of WHO YOUARE is most likely a secondary considera-tion. Armed with a clear understanding ofWHO YOU ARE, and a trusted consultingpartner that is committed to adding valueto your business, you can create consisten-cy and predictability in an ever evolvingbusiness climate.

Eric Levin is a managing partner atHammerhouse LLC, an expanding nationalrecruiting and strategic growth firm for thefinancial services industry with mortgagesales and leadership placement at its core.He may be reached by phone at (828) 358-0053 or e-mail [email protected].

Mortgage Producer: Who Are You?

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The Leader in Branching Solutions

Become a Full Service Lending Branch of NFM, Inc.—Contact Kingsley Kodan, Branch Development Manager

Branch opportunities are currently available in: Alabama, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

conclusion reached by the CFPB clearly isthat where a loan originator has no orminimal ability directly or indirectly toadd, drop, or change a factor, that factorcannot be a proxy for the transaction’sterms, because such a factor cannot bethe basis for incentives to steer con-sumers inappropriately.

The CFPB takes the position that acredit score proxy may or may not be aproxy for a transaction’s terms, depend-ing on the facts and circumstances. Inother words, it is not automatically aproxy, as many lenders and loan origina-tors have maintained.

Further, the Proposals clarify that therule does not prohibit compensating loanoriginators differently on different trans-actions, provided such differences incompensation are not based on a trans-action’s terms or a proxy for a transac-tion’s terms.

The Proposals also address restrictionson pooled compensation, profit-sharing,and bonus plans for loan originators,depending on the potential incentives tosteer consumers to different transactionterms, as follows:

� Employers would be permitted tomake contributions from generalprofits derived from mortgage activityto 401(k) plans, employee stock plans,and other “qualified plans” under taxand employment law.

� The Proposals permit employers topay bonuses or make contributions tonon-qualified profit-sharing or retire-ment plans from general profitsderived from mortgage activity if:• Either: the loan originator affect-

ed has originated five or fewermortgage transactions during thelast 12 months;

• Or: the company’s mortgage busi-ness revenues are limited (theCFPB proposes two alternativesfor applicable tests: A 25 percentor 50 percent of total revenues).

� The amounts of contributions andbonuses, though such contributionsand bonuses could be funded fromgeneral mortgage profits, may not bebased on the terms of the transactions.

Loan OriginatorQualificationRequirements“Data is not information, information isnot knowledge, knowledge is not under-standing, understanding is not wisdom.”—Clifford Stoll

Dodd-Frank contains a provision requir-ing both individual loan originators andtheir employers to be “qualified” and toinclude their license or registration num-bers on certain specified loan documents.Consequently, the Proposals set forth spe-cific mandates regarding loan originationqualifications.

We already know that the Secure andFair Enforcement for Mortgage LicensingAct (SAFE) requires licensing and registra-tion of loan originators. Under theProposals, the loan originator’s employermust ensure that the loan originatormeets character, fitness, and criminalbackground check standards that areequivalent to the SAFE requirements aswell as receive training “commensuratewith the loan originator’s duties.”

Employers and individual loan origina-tors, if primarily responsible for a particu-lar transaction, would be required to list

their license or registration numbers oncertain key loan documents.

Issues andControversies“There ain’t no answer. There ain’t gonnabe any answer. There never has been ananswer. That’s the answer.”—Gertrude Stein

Let’s now take into consideration several,specific details of the Proposals. These aresome, but certainly not all, of the issuesand concerns that have become pro-nounced since the loan originator com-pensation rule became effective in April2011. It is important, therefore, to consid-er how the CFPB is endeavoring to go

about resolving them. My remarks will belimited to the Proposals themselves andnot the controversies involved in eachinstance.

Point BanksThe CFPB has determined that there areno circumstances under which pointbanks are permissible, and they thereforecontinue to be prohibited. If you are notfamiliar with how point banks work, thisis a generic description:1. Each time a loan originator closes a

transaction, the lender contributessome agreed upon, small percentageof that transaction’s principal amount(for example, 0.15 percent, or 15 “basis

loan originator compensation continued from page 8


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By Casey Cunningham

We talk a lot aboutgenerating business.It’s the name of thegame. We want moreand strategize formore. We think of

everything from what are the right tac-tics, how many do we need, how do weimplement them, who are the rightreferral sources, where do you findthem, when you find them, how do youget them to actually want to meet you,how do you develop a relationship thatactually generates referrals. We talk, wetrain, we plan and we prospect, but wemay have left out one really, reallyimportant component … who is ourcompetition?

You can be the best of the best, butunless you know your competition, youhave no idea what you are up againstand tactically speaking, that puts you ata huge disadvantage. As of the moment,the playing field is pretty level. I meanseriously, we’re down to Freddie Mac,Fannie Mae, the Govies (FHA and VA)and a few other select scattered pro-grams. It certainly is not the smorgas-bord from years prior. So, with thatbeing the case, it’s easy to see, the drawfor customers is not the company andwhat they can offer, the draw is you.

You and umpteen hundred otherloan officers are vying for the samebusiness. And the playing field we justdiscussed not only refers to mortgages,but also to loan officers. We certainlyhave reduced the ranks over the lastseveral years and weeded out thosewho were riding the coattails of ourindustry to make a healthy living. Thoseof us who stayed the course are thrivingin a refinance market and trying tofocus on the purchases yet to come. Wemarket, prospect, call, e-mail and useevery tactic we’ve relied on over theyears to generate business. We do thesame thing; we play on the same field… but that’s about to change.

The title of this article asks if youknow your competition for a very spe-cific reason. You may know who it istoday, but I want to give you someinsight into who your competition isgoing to be and what they are going todo, so you can prepare yourself now.

Do You KnowYour Competition?

Prepare yourself to get ahead andhopefully stay there.

As lenders strive to replenish theranks and plan for the future, they will,out of necessity, draw from the GenY’ers. This generation will be your directcompetition and you need to know afew things about them, and in learningabout them, you may learn a few thingsfrom them.

This generation uses technology likeit was a natural appendage. They’vegrown up with it. Facebook, Twitter,YouTube, Mobile apps, Pinterest … youname it, they know it and know how touse it. In a report by Patricia Martintitled “Tipping the Culture: HowEngaging Millennials Will ChangeThings,” her research shows this gener-ation is more networked than any otherand will thereby wield influence andpower sufficient to determine thefuture success of an organization. Ifthey can do that, they can certainlyinfluence customers significantly. Withthat as a glimpse of your competition,the question becomes, are you ready tocompete with them? Step into the ring,fight the fight and emerge the victor forthe elusive prize of market share. To doso, you must be prepared to competeon their turf. Are you?

Training to win is about knowing thetactics your opponent will use. Weencourage loan officers to be masters oftheir profession, but we discuss little ofbeing master marketers. Mortgage vet-erans may scoff at the social mediafrenzy saying this will always be a rela-tionship-based business, and on thatpoint, they are absolutely correct. Yet,the Gen Y’ers are brilliant at creatingrelationships at the stroke of a key-board. If you are not absolutely com-fortable, confident and skilled in thismedia, you have some work to do.Consider the following:

� LinkedIn is fairly easy to use and is agreat professional site to display yourexpertise. You can connect with busi-ness professionals from relatedindustries to orthodontia. It is imper-ative you create a professional profileand learn to ask for connections andreferrals on this site.

� Facebook is more casual, but ifSponsored Editorial

Marketing in 2012:Fall Tips to Maximize

Your Marketing Dollars

Follow the TrendsThe names in the business are HARP 2.0 – FHA Streamline – VA IRRRL.Spending your marketing dollars on what is working is always a safe bet.The public is well aware of all the changes in the mortgage industry, andis keeping up on buzz words like STREAMLINE and HARP. Try to find amarketing campaign that works for you and your budget and go to work.Even if it means you have buy leads. Just do something. Business is stillpicking up nationwide and those that aren’t moving with it are being leftbehind.

Maximize your returnGo for the low hanging fruit, the easiest loans that close the fastest.These days that’s Refinance Business. Get to the people that can refi-nance today. Once you’ve got that angle covered, then go after purchase.Purchase business is great, but it’s time consuming. Keeping a mix ofboth purchase and refi is a safe plan to keep up with the competition.

Don’t Reinvent the WheelYour competitors aren’t going to tell you what’s working for them so trycalling a national marketing firm that can tell you what’s working in yourarea and for your specific loan types. One that follows the trends so youcan follow them yourself. The market will always show you how to bestoffer your products.

Test, Measure, Test againDon’t think your first campaign is going to be the best one. In fact, inmost cases, the first campaign is only the beginning. Campaign 3-4 iswhere they really start paying off. Many people start a marketing cam-paign with a new company and think that they should be setting recordsright away. This couldn’t be further from the truth.

Fall tips for closing out 2012 strongDirect mail responses are up. If you haven’t done direct mail in a while,it might be time to give it a try again. Yes it’s expensive but it works. Ifyour nervous about losing money on direct mail, Google “GuaranteedDirect Mail” and you’ll find some safe options.

Live transfers are a thing of the past unless you incorporate directmail. With as much as 90% of the population on the DNC, telemarketingjust isn’t what it used to be. But, since direct mail is working, you canfind success putting the two together. VERY QUALIFIED CALLS.

New data files are available specifically for the mortgage industry spe-cific for HARP – FHA – VA and REVERSE. Data is the number one mostimportant aspect of your campaign, make sure your working with some-one who understands your needs and knows how to effectively targetyour demographic. Mail houses typically won’t be the most knowledge-able but good marketing firms will.

FHA, HARP, VA, and Reverse are all responding very well to marketingright now. November and December are always BIG refi months. PeopleLOVE extra cash around the holidays and skipping a mortgage paymentcan help out a lot so plan on spending some money on marketing andfinishing the year strong. Last, but not least, RIDE THE HARP 2.0 WAVE!This has been the biggest thing to hit the mortgage industry since 2009!

Medford, Ore.-based TagQuest is a full-service marketing firm createdspecifically for the ever-changing business world. TagQuest assists compa-nies with their direct marketing, advertising and branding needs, andknows what it takes to generate quality customers and, most importantly,how to retain those customers for years to come. TagQuest brings forth aunique opportunity to utilize our experience and expertise in varying con-sumer sales and marketing environments. For more information, call (888)717-8980 or visit Tagquest.com.

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you’re of the mindset to woo realestate agents, you will find them onthis site more than LinkedIn. Youwill also learn a lot of personal triv-ia to aide you in personalizing yourmarketing to them. Rememberthough, you are using this for busi-ness, so keep your comments andpictures appropriate.

� Pinterest is fairly new to most of us,although it launched over two yearsago. Since then, it has taken thesocial media world by storm.Conduct a Google search onPinterest and the stats are evenlyreported among many sources thatPinterest drives more referral trafficthan Google+, YouTube andLinkedIn. Take note, almost everyreal estate agent has every listing“Pinned.” You cannot afford toignore this site.

� Twitter is used every day by mil-lions of people who want to shareideas or get information from oth-ers. It’s easier than it seems and foronly minutes a day, you can con-nect, get feedback, market andbrand yourself.

Loan officers live (or should live) inthe land of prospecting. Over the years,my research and experience has shownthat to keep your business thriving, youmust prospect a minimum of 10 hours aweek. Consider a 50 hour work weekand realize that 20 percent of the timewill generate 80 percent of your busi-ness. That may seem like an enormoustask with the current state of affairs inour industry. Get away from your deskand the mounds of files, and get to thekeyboard of social media and the car forface-to-face prospecting. While I am stilla strong advocate of face-to-face andbeing seen in public, I also believe youneed to be seen virtually. Be purposeful… learn social media tactics, devotevaluable sales time to online prospectingand watch your business evolve with thenext generation. It’s the way to go, it’sthe way of the future, and it’s what yourcompetition will be doing.

Casey Cunningham is president of XIN-NIX, a provider of mortgage sales andleadership development programs. Shemay be reached by phone at (678) 325-3501 or e-mail [email protected].

Sponsored Editorial

By K. Justin Restaino

The FHA MIP program has generated a strong demandfor refinances by borrowers stuck in high interest rateloans, thus creating a surplus of trigger leads availablefor mortgage marketing

The FHA MIP program produced a surge in the numberof borrowers seeking to refinance their loans that have been stuck in highinterest rates. This created a favorable condition for mortgage marketingprofessionals who have been getting high response rates with direct mailusing trigger leads generated from the vast numbers of refinance applicantshaving their credit pulled.

A trigger lead is created when someone has their credit pulled. Mortgageprofessionals can purchase lists of trigger leads for use in either direct mailor telemarketing campaigns. Triggers are a valuable resource since thesepeople are actively seeking to refinance. However, factors such as timelinessto contact these candidates and a strong sales ability, are necessary to besuccessful.

Trigger leads can be purchased as daily or weekly lists. These are candi-dates that are in the market now, so it is extremely important to contactthem before they sign with their original mortgage shop lender. For thisreason, daily and weekly trigger leads tend to be more valuable, carrying ahigher premium. Most people are open to shopping around for the bestdeal, so a mortgage shop with a strong sales force can often have a veryhigh success rate using trigger leads paired with a direct mail marketingcampaign. An average conversion rate for a mortgage shop with a strongsales force can be greater than 20 percent of the inbound calls. Direct mailmarketing using trigger leads can be a viable option for a mortgage shop togenerate a consistent flow of new customers if done on a regular basis.Sending consistent advertisements also helps to strengthen the brand iden-tity, and put the company in the forefront of potential customers – noteveryone will call after seeing an ad once. Phone lists can also be used inconjunction with a direct mail marketing campaign to follow up after themailing.

With timeliness being such a huge factor in the success of a direct mailcampaign using trigger leads, a mortgage shop needs to find a mortgagemarketing company that is not only able to respond quickly to trigger can-didates, but also has solid experience in advertising for the mortgage indus-try. A mortgage marketing firm should be able to handle the entire cam-paign in-house. Outsourcing pieces of the campaign such as purchasing thetrigger leads, designing the advertisement, or printing and mailing, notonly adds more overhead costs, but also takes more time to get the finishedadvertisement to the hands of the candidate–which may be too late.

Using a mortgage marketing firm with a solid reputation and experi-ence in the industry can be the difference between the success or failureof your campaign, and your company’s reputation. With compliancebeing such a huge factor in today’s environment, it is important to finda company that not only has your best interests in mind, but also has astellar reputation and no blemishes.

K. Justin Restaino is vice president of Titan List & Mailing Services Inc. Formore than 13 years, he has led Titan’s Mortgage Division, helping lenders ofall capacities grow their businesses utilizing targeted direct mail. With a spe-cialized focus in refinance and purchase markets, Restaino has the insight forproper data and mail application for success. He may be reached by phone at(800) 544-8060, ext. 204 or e-mail [email protected].

FHA MIP Program CreatingSurplus of Trigger Leadsfor Mortgage Marketing


points”) into the loan originator’s pointbank account. (The point bankaccount is not actually a depositaccount with the creditor or anydepository institution but is only acontinuously maintained accountingbalance of basis points credited fororiginations and amounts debitedwhen “spent” by the loan originator.)

2. The loan originator may spend anyamount up to the current balance inthe point bank to obtain pricing con-cessions from the creditor on the con-sumer’s behalf for any transaction. (Forexample, the loan originator may paydiscount points to the creditor from theloan originator’s point bank to obtain alower rate for the consumer.)

The CFPB maintains that payments topoint banks serve as a form of loan origi-nator compensation “because theyenable additional transactions to be con-summated and loan originators to receivecompensation on these transactions.”Accordingly, they are a “financial incen-tive” to the loan originator and, there-fore, point banks are compensation.15

To the extent such payments are basedon the transaction’s terms or a factor thatoperates as a proxy for the transaction’sterms, they are a direct violation of Dodd-Frank.16 Even if the contribution to a loanoriginator’s point bank for a given trans-action is not based on the transaction’sterms (or a proxy), the CFPB holds that aloan originator’s subsequent spending ofamounts from the point bank on othertransactions is an impermissible pricingconcession.17

Furthermore, the CFPB closes out eventhe so-called “pricing concessions” use ofreserved funds in a point bank. The viewis that a point bank whose funds could bereserved for use in the unique circum-stances where pricing concessions wouldbe permitted–even this application offunds cannot be legitimate because thecriteria set forth in the pricing concessionsprovision limit such concessions to unusu-al and infrequent cases of unforeseenincreases in closing costs and, by definition,a point bank contemplates “routine use,”which is contrary to TILA’s intent.

I should point out here, as mentionedin Part I of this series, that the CFPB’s deci-sion not to propose to allow point bankswas also influenced by the negative con-sensus view of SERs participating in theSmall Business Review Panel process andthe negative views expressed by manyother stakeholders.18

Pricing ConcessionsThe Proposals contain revisions to theactual staff commentary addressing loanoriginator pricing concessions. In theexisting comment, a lender and loan orig-inator may not agree to set the origina-tor’s compensation at a certain level andthen subsequently lower it in selectivecases (such as where the consumer isoffered a reduced rate to meet a quotefrom another creditor). The compensationis not subject to change (increase ordecrease) based on whether different loanterms are negotiated.

Under the Proposals, the CFPB assertsthat, while the creditor may change loan


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By Dr. Kerry Johnson,MBA

Buying signals are a lotlike moving through asubmarine. You closethe water-tight doorsand then progress to

the front of the boat. As your prospect dis-plays buying signals, they are letting youknow the watertight doors can close andyou can move ahead. Rarely is a buying sig-nal a sign that someone wants to sign thecontract then and there. But it is a cue theywant you to move ahead faster.

Here are some of the verbal and non-verbal cues that will indicate when youhave said enough:

The Whistling TeapotHaving watched hun-dreds of hours of video-tape on prospect behav-ior, I have noticed theywill invariably lean for-ward in their chair ortoward you while stand-ing when they areready to buy. The

Whistling Teapot is an indication that yourprospect wants you to pull out the contract.If you see them suddenly move forward,they are indicating a change in behavior.That change is your buying signal cue.

I recently spoke at a Canadian sales con-ference in Edmonton. I made the mistakeof admitting that I was the guest to theCanadian immigration officials.Unfortunately, the officials detained me forover four hours claiming I was taking jobsaway from Canadians. Ironically, if I was aterrorist asking for asylum, they wouldhave released me immediately. They wereonly waiting for the next flight back to theU.S. to deport me. One official said myclient could have found another speakerbesides me in Edmonton, although he didnot know anyone off-hand.

About an hour earlier, these Gestapoofficials allowed me to go out past immi-gration, to tell my host, who had beenwaiting to pick me up, he could come in tosee me. After two hours of negotiations, Ifinally was able to convince the inspectorthat a speaker on sales psychology, whowas a past pro tennis player and the authorof seven books, would be hard to replace atmidnight for a program the next morningin front of 600 attendees. As I said this, theimmigration official leaned into theWhistling Teapot buying signal. I stoppedtalking and said, “What do you think?” Theofficial immediately broke down and men-tioned that there was one area of the regu-lation that allowed a foreign speaker toperform for less than an hour over lunch,as long as it was a free speech. I jokinglysaid, “That’s me.” He smiled back.

The problem was that my host meetingplanner, who had been sitting quietly withme up to that point, decided that he hadtaken enough crap from these immigrationthugs. The timing could not have been any

worse. The meeting planner missed notonly the buying signal, but also the evenmore obvious verbal cues as well. The offi-cial then leaned back into his chair, crossedhis arms and legs, and told me again thathe was going to deport me. It took meanother two hours to get the official backon my side.

The Sitting Tremor Like The Whist-ling Teapot, theSitting Tremoris also dis-played by mov-ing forward in

their chair or leaning in toward you. Yourprospect is signaling, “Stop talking already,let me buy!” There is a difference. If yourprospect sits forward in his chair the wholetime, his back may just be sore. But if yousuddenly see them move forward in theirchair, you have got a commission checkcoming as long as you know enough toclose at the right time.

Verbal CuesVerbal buyingsignals are moreobvious. Youhave heard themover the tele-phone or in per-son without even

knowing it. These buying signals are:� How much does this cost?� Can I get this in blue?� How quickly can I get delivery?� What kind of guarantee does this come

with?All of these are obvious signals that your

prospect has heard enough and wants tostart thinking about exchanging money forwhat he has listened to.

Like non-verbal cues, you should trialclose when you hear a verbal buying signal.I watched one salesperson spot a buyingsignal and then trial close. The prospectsaid, “Great, let’s do it.” She then startledme by saying to the prospect, “Are yousure?” He then said, “I don’t know, should-n’t be?” And she was off to the races tryingto recover a sale.

Sales is all about probing for needs, pro-viding solutions that work, and then gettingyour client to implement your recommen-dations. Most of the time, your clients willshow and tell you when they are ready tobuy. If you miss those cues, you may missthe sale. Good luck and pay attention!

Kerry Johnson, MBA, Ph.D. is a best-sellingauthor and frequent speaker at mortgageorigination meetings around the world. PeakPerformance Coaching (his one-on-onecoaching program) promises to increase yourbusiness by 80 percent in eight weeks. To seeif you are a candidate for this fast track sys-tem, click on www.KerryJohnson.com/coach-ing and take a free evaluation test. He maybe reached by phone at (800) 883-8787 or e-mail [email protected].

Buying Signals (Part II)

United States AppraisalsLaunches New ProprietaryTechnology Platform

United States Appraisals has announced thelaunch of its new proprietary operating sys-tem, the culmination of months of designand development with input from bothappraisers and mortgage industry profes-sionals. The new technology platformdrives redundancies and non-value addedactivities out of the business process, elimi-nates wasted time, inefficiency and costand positions United States Appraisals atthe forefront of mortgage industry technol-ogy. United States Appraisals is currentlyrolling out the platform to existing clients.New clients will have immediate access tothe new technology.

“Our rapid growth exposed severalweaknesses in our previous system,” statedAaron Fowler, president of United StatesAppraisals. “This new proprietary platformprovides a foundation for our continuedexpansion while enhancing service to ourexisting clients. We continually push forfaster service and better quality. This tech-nology allows us to deliver on both fronts.”

The new operating system provides amyriad of enhancements for United StatesAppraisals’ staff, clients and appraisers.Elimination of redundancies in processeswill reduce the chance of errors whileincreasing speed and efficiency. Clientswill notice a streamlined order entry anddelivery portal as well as enhanced onlinecommunication. The new platform willalso allow United States Appraisals to eas-ily add new products and integrate withloan origination systems as it continues toadd new clients.

“Basically, we re-engineered the entirebusiness process and provided tools toallow all parties to operate faster and moreefficiently,” said Dan Wieschhaus, chieftechnology officer. “Among the improve-ments are enhanced proximity and qualityqualifiers to speed and perfect appraiserassignment, the ability for appraisers toreview and accept orders from their mobilephones and streamlined pipeline views toallow better management of the increasingnumber of appraisal orders.”

Calyx Paves the Way forMobility With Release ofPoint 8.0

Calyx Software hasannounced the launch

of Point and PointCentral 8.0. This latestrelease paves the way for Calyx Mobile tobring much needed mobility to loan origi-nators for productivity on the run. Pointand PointCentral 8.0 not only enhance theuser experience for the upcoming mobileapps, but they offer additional features foreven greater convenience to users of Pointand WebCaster. With Point andPointCentral 8.0, several modificationshave been made to prepare users formobile productivity. The software, alongwith the account management system,MyCalyx, has been optimized for themobile applications functionality.Sophisticated technology securely sharesdata across applications for more effectiveworkflow and streamlined processes.

Users have been enthusiastic to learnabout Point’s new Pipeline View screenwhich offers a centralized location to viewand manage loans grouped by status, datafolder or user. Users can choose to seeautomatic group settings or create manualviews so they can see specific loans regard-less of status. This screen can be set up asthe default screen for Point for each userdepending on need or preference and willbe shared automatically with the CalyxMobile Apps available in November.

“We are excited that this release drivesour clients toward the mobile technologyso many of them have been asking for.Getting our users ready for the upcomingmobile apps is paramount with 8.0,” saidJody Collup, director of marketing at CalyxSoftware. “We’re pleased that 8.0 providessuch a springboard to help our clientsincrease their productivity and get themost out of the software that is so impor-tant to their business.”

This release also offers a new feature forWebCaster and Point users that enables newapplication notification and downloadsdirectly from within Point. Users can cus-tomize the feature to determine the type andscheduling of notifications as well as otherhelpful parameters. Direct import of newapplications into Point saves valuable time ingetting new files set up and in process toimprove service levels to borrowers.

In addition to updates to severalscreens and forms needed for compliance,Point and PointCentral 8.0 include 11 extraoptions for the “advanced search” buttonfeatured prominently on the left side nav-igation panel. These new options allowusers to search for loans based on criteriasuch as investor, borrower Social Security,loan amount, or type of loan.


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terms or pricing – for instance, in order tomatch a competitor, avoid triggeringhigh-cost loan provisions, or for otherreasons–the loan originator’s compensa-tion on that transaction may not bechanged. Thus, the revised comment ofthe Proposals clarifies that a loan origina-tor may not agree to reduce its compen-sation or provide a credit to the consumerto pay a portion of the consumer’s closingcosts.19

The CFPB also intends to delete anexisting comment that pertains to trans-actions in which any loan originatorreceives compensation directly from theconsumer (i.e., “consumer-paid transac-tions”). The Proposals now also include anew comment addressing a discrete issuerelated to pricing concessions. This pro-posed comment provides that loan origi-nators are not prohibited from decreas-ing their compensation to cover unantic-ipated increases in non-affiliated third-party closing costs which result in theactual amounts of such closing costsexceeding limits imposed by applicablelaw (i.e., tolerance violations underRegulation X, the implementing regula-tion of the Real Estate SettlementProcedures Act [RESPA]).

Note: this interpretation does not applyif the creditor or the loan originator knowsor should reasonably be expected to knowthe amount of any third-party closing costs

in advance. To unpack this language foryou, this means that a loan originator isreasonably expected to know the amountof the third-party closing costs in advance ifthe loan originator allows the consumer tochoose from among only three pre-approved third-party service providers.

It is interesting to recognize that theCFPB seems to believe here that such pric-ing concessions, when made in responseto unforeseen events outside the loanoriginator’s control to comply with other-wise applicable legal requirements, donot raise concerns about the potential forsteering consumers to different loanterms. That is, as the CFPB clearly states,“if the excess closing cost is truly unantic-ipated and results in the loan originatorhaving to take less compensation to curethe violation of applicable law, no steer-ing issues are present because the loanoriginator’s compensation is beingdecreased after- the-fact.”20

Thus, the CFPB is concluding that, inthe absence of the aforementioned clari-fication, lenders and loan originatorsmight incorrectly surmise that such pric-ing concessions being borne by a loanoriginator would violate those provisions,or they could face unnecessary uncertain-ty with regard to compliance with theseprovisions and other laws, such asRegulation X’s tolerance requirements.

Again, another loophole is closed in

the Proposals, because under the pro-posed comment, a loan originator cannotmake a pricing concession where the loanoriginator knows or reasonably is expect-ed to know the amount of the third-partyclosing costs in advance. If a loan origina-tor makes repeated pricing concessionsfor the same categories of closing costsacross multiple transactions, based on aseries of purportedly unanticipatedexpenses, the CFPB believes the loan orig-inator is reasonably expected to know theclosing costs across multiple transactions.In order to prevent that gambit, such pric-ing concessions would raise concernsabout impermissible pricing concessionsdue to the fact that that loan originatorscould knowingly overestimate the closingcosts and then selectively reduce the clos-ing costs as a concession.

Alternative Loan DilemmaAs I discussed above, under the proposal,a lender is not required to make availablea comparable, alternative loan if the con-sumer is unlikely to qualify for that loan.The Proposal solicits comment onwhether consumers should be informedthat they were not given informationabout a comparable, alternative loanbecause they were unlikely to qualify forthat loan.

On the one hand, in transactions thatdo not involve a loan originator entity(i.e., a mortgage broker), should lendersbe required either to make the compara-ble, alternative loan available to the con-sumer if the consumer likely qualifies forthat loan or to inform consumers that the

lender is not making the comparable,alternative loan available because theconsumer is unlikely to qualify for thatloan?

On the other hand, in transactions thatinvolve a loan originator entity, should aloan originator entity using the above-mentioned safe harbor21 be required todisclose to a consumer that the loan orig-inator entity did not present a loan thatdoes not include discount points andorigination points or fees because theconsumer was unlikely to qualify for thatloan from the creditors with whom theloan originator organization regularlydoes business?

So, the ponderable question becomes:would it be useful to consumers to beinformed that they were unlikely to quali-fy for the comparable, alternative loan?

A loophole may exist: if lenders who donot wish to make loans that do not includediscount points and origination points, orfees available to particular consumers,could possibly manipulate their under-writing standards so that those consumersdo not qualify for such a loan. This is whythe CFPB is seeking to avoid such a practiceby prohibiting lenders from changing theirqualification standards, such as loan-to-value ratios and credit score requirements,solely for the purpose of disqualifying con-sumers from receiving loans that do notinclude discount points and originationpoints or fees.

The Proposals suggest that an alterna-tive would make clear that lenders must



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make available the loan that does notinclude discount points and originationpoints or fees unless, as a result of theincreased monthly payment resultingfrom the higher interest rate on the loanthat does not include discount points andorigination points or fees, the consumercannot satisfy the lender’s underwritingrules. The CFPB hopes to determinewhether there is a risk that, absent such arequirement, some lenders “mightmanipulate their underwriting standardsand whether the Bureau should adopt arule against doing so.”22

Nevertheless, the CFPB believes thateven if underwriting standards could notbe manipulated, lenders who do notwant to make loans that do not includediscount points and origination points orfees could set the interest rates high forcertain consumers, which would therebyincrease the monthly payment on thoseloans to be high so that those consumerscannot satisfy the creditor’s underwritingrules. Therefore, an alternative is underconsideration, whereby a creditor wouldbe able to make available a loan thatincludes discount points and originationpoints or fees only when the consumeralso qualifies for a comparable, alterna-tive loan that does not include discountpoints and origination points or fees.

On the one hand, a potential advan-tage of this alternative is that it wouldeffectively limit lenders’ opportunity tomanipulate their underwriting standardsor charge above-market interest rates toprevent particular consumers from quali-fying for a loan that does not include dis-count points and origination points orfees.

On the other hand, the CFPB is con-cerned that adoption of such an alterna-tive may impact consumers’ access tocredit.

One more thing: the Proposal recog-nizes that there are some lenders whowill not make a loan where the debt-to-income ratio exceeds a certain level, andthat there may be some consumers forwhom the difference between the inter-est rate on a loan that includes and doesnot include discount points and origina-tion points or fees will determinewhether the consumer can satisfy thecreditor’s debt-to-income standard. Insuch a scenario, consumers who do notqualify for specific loans that do notinclude discount points and originationpoints or fees would also not be able toreceive from the lender the same type ofloans that include discount points andorigination points or fees. This couldharm those consumers who might preferto obtain from a lender a specific type ofloan that includes discount points andorigination points or fees, rather than notbe able to obtain that type of loan at allfrom the lender.

Facilitating ConsumerShoppingThe Proposals also seek to facilitate con-

sumer shopping “by enhancing the abilityof consumers to make comparisons usingloans that do not include discount pointsand origination points or fees made avail-able by different creditors as a basis forcomparison.”23

As discussed above, for retail transac-tions, a creditor will be deemed to bemaking the loan available if, at any timethe creditor provides a quote specific tothe consumer for a loan that includes dis-count points and origination points orfees, the creditor also provides a quote fora comparable, alternative loan that doesnot include discount points and origina-tion points or fees (unless the consumer isunlikely to qualify for the loan).Nonetheless, the CFPB is concerned thatby the time consumers receive a quotefrom a particular lender for a loan thatdoes not include discount points and orig-ination points or fees, they may havealready completed their shopping in com-paring loans from different lenders.

Thus, the Proposals include a solicita-tion for comments on whether the exist-ing advertising rules24 should be revised toenable consumers to make comparisonsusing loans that do not include discountpoints and origination points or feesmade available by different creditors as abasis for comparison.

Currently, if an advertisement includesa “trigger term,” the advertisement mustcontain certain additional information(i.e., amount or percentage of any downpayment, the number of payments orperiods of repayment, and so forth). TheCFPB now is contemplating whether anadvertisement that contains the interestrate for a loan that includes discountpoints and origination points or fees alsomust contain the following informationfor the comparable, alternative loan thatdoes not include discount points and orig-ination points or fees: (1) The interest rate,(2) the amount or percentage of the downpayment, (3) the terms of repayment,which reflect the repayment obligationsover the full terms of the loan, includingany balloon payment, and (4) the “annualpercentage rate,” using that term, and, ifthe rate may be increased after consum-mation, that fact. The scope here is obvi-ously expanded to require that a lenderthat must provide in an advertisement theinterest rate for a loan that includes dis-count points and origination points orfees also to include in such advertisementcertain information for a comparable,alternative loan that does not include dis-count points and origination points orfees. So, the CFPB is determining whetherthis information about the loan that doesnot include discount points and origina-tion points or fees must be contained inorigination points or fees.

The goal is to make it easier for con-sumers to compare the loan pricing onloans that do not include discount pointsand origination points or fees available


By Jennifer Robinson

Menlo Park, N.J. is a good source of inspiration.It’s the home of inventor Thomas Edison’s Laboratory and

is where he invented the light bulb. With hard work, innova-tion and dedication, Edison made lives easier.

Menlo Park Funding uses the same philosophy, to make homeowner’slives “easier” financially and that includes homeowners who happen to bea part of the U.S. Armed Forces.

It’s also the belief followed by this month’s mortgage hero NormanZolkos of Menlo Park Funding. He recently completed the USA Cares’“Certified Military Housing Specialist Course” and is using his new trainingto make the lives of our veterans a little easier.

Norman has literally given hundreds of hours of his time to helping mil-itary borrowers get lower-rate VA mortgages and eliminate PMI, this savinga borrower hundreds of dollars.

This year, Norman assisted more than 40 veterans, helping each of themto save an average of $240 a month. That savings ismeaningful to veterans and their families.

“Originating a VA mortgage may mean morepaperwork, more training and spending more timethan loan originators are accustomed to,” saidNorman. “However, knowing we are giving a serviceto our nation’s military is a personal reward. Iencourage all originators to become a “MilitaryHousing Specialist” through USA Cares so they cangive back something to the military that defend ourfreedom on a daily basis.”

One veteran who inspired Norman was a recently-wounded warrior of the war in Iraq. Norman helped to close his mortgagein nine days by galvanizing the Department of Veterans Affairs and histeam at Menlo Park Funding.

“He had sustained multiple injuries while serving in Afghanistan, andhad endured several surgeries,” said Norman. “I was amazed and inspiredby his great spirits, even though he suffered a horrific injury and will havepain for the rest of his life.”

If you want to connect with Norman about how you can make the livesof our worthy veterans a little easier, please e-mail him [email protected].

USA Cares salutes Norman Zolkos for giving our military, “A Hand Up!”

Be a Mortgage Hero! This recognition is free to Certified Military HousingSpecialists. Take the FREE Certified Military Housing Specialist course offeredonline by USA Cares and tell us how you are “Helping those who defend ourhomes, preserve their own.” Jennifer Yopp Robinson is the vice president ofprograms and services at USA Cares, where she has worked since 2007. Shemay be reached by phone at (800) 773-0387, ext. 115 or e-mail [email protected].

USA CaresMortgage Heroes

Normann Zolkosoff Menloo Parkk Funding

Norman Zolkos


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new to market continued from page 34

Quandis Releases SkipTrace App for DistressedBorrowers

Quandis Inc. hasannounced the

release of a Web-based skip trace applica-tion to locate individuals who are indefault via a centralized platform. Thesolution can be utilized by mortgage com-panies to quickly locate, contact and per-sonally engage with borrowers who arein distressed financial situations.Quandis’ skip trace solution is designedfor use by servicers, lenders, banks,default attorneys, loss mitigation cen-ters, third-party collection agencies andessentially any entity that needs to locateindividuals. The new skip trace applica-tion is utilized to quickly and efficientlycontact virtually anyone that is indefault, and also for call campaigns toproactively reach out to borrowers andoffer them loan modifications, workoutoptions, various government programs,etc. Organizations utilizing Quandis skiptrace are able to save time, eliminateerrors, reduce costs and offer tools thathelp comply with state-level telephonecontact rules.

“In many instances, organizationsresort to using manual processes to con-tact borrowers for debt collection or otheroutreach purposes,” said Scott Stoddard,CEO of Quandis Inc. “The sheer number ofdefaults our industry is challenged tomanage is the driver behind our develop-ing this application. Handling call cam-paigns manually or with an antiquatedsystem is cumbersome, time consuming,impedes file completions and can poten-tially result in the violation of do not callcompliance rules. Our skip trace applica-tion provides an end-to-end solution thateffectively manages the collections and/orcall campaign process.”

Quandis says that manually locatingborrowers typically involves users havingto use multiple services such as LexisNexis, Pacer bankruptcy searching,TransUnion, 411, 555-1212, Quandis’automated SCRA military searches andothers. This forces employees to con-stantly jump to different Web sites tolocate people, which wastes time and isterribly inefficient. Quandis’ skip traceapplication integrates with and central-izes each search service into a singleapplication, streamlining searches withthe click of a button that instantlyreturns the results.

For users, Quandis’ skip trace solutionincludes interview-style call scripting anddirection, workflow management, taskassignments, call prioritization and vari-ous tools that enable them to quicklyand efficiently complete files. For man-agers, the application provides themwith dashboard-level views and report-ing, complete visibility into the entireprocess and KPIs (key performance indi-cators) that to help them optimizeemployee performance, time manage-ment and effectiveness.

CoreLogic Debuts New TPO Portal

CoreLogic has announcedthe release of its Third-Party Originator (TPO)portal, developed byCoreLogic Dorado. Using

this online loan processing system, corre-spondent clients and wholesale brokerscan upload and lock multiple loans in abulk transmission to an enterprise lendingsystem (ELS) and then monitor those loansfor conditions and approvals. TPO portalwas designed as an interactive module tobe used with the existing ChannelMasterEnterprise Lending System (ELS). Theenhanced technology also adapts to anyexisting ELS.

The TPO portal also allows clients toadd information including documentsneeded to validate loan program eligibilityand pricing, view a loan’s pricing historyand refresh loan data. Once loans are sub-mitted, TPO Portal helps users manage theloan pipeline and resolve open conditions.Checklists can be created to verify loansand to generate conditions when a loanshows a failed checklist item. The technol-ogy delivers integrated validation andcompliance controls, and allows full visi-bility to expedite loans through the systembefore locks expire.

“TPO Portal is all about speed,” said RobCarpenter, vice president of technology forCoreLogic Dorado. “While it’s not possible tofully automate third-party lending, this is anew technology providing an unprecedent-ed level of efficiency and convenience. TPOPortal’s intuitive and simplified communi-cation tools provide a top-down view of traf-fic, down to the loan-detail level. By increas-ing oversight and control, more loans canquickly move through the system.”

ChannelMaster ELS, first introduced in2005, streamlines the way correspondentlenders manage loans as they travelthrough the pipeline from lead to funding.By organizing loans in a central hub,ChannelMaster ELS allows loan agents,processors, underwriters, closers, fundersand others involved in the mortgage origi-nation process to work on multiple loanfiles at the same time. The system also fea-tures intuitive origination lifecycle recogni-tion ability, ensuring the processor com-pletes required actions first and preventsnoncritical actions from causing a loan tostall. This extends the reach of the workflowto streamline delivery for third parties.

Axacore Launches NewElectronic DocumentManagement Platform

Axacore Inc. hasannounced the

release of its latest Electronic DocumentManagement (EDM) platform. Highlights ofthe new EDM include: Innovative userinterface features allowing greater controland efficiency when working with docu-ments; new document compare feature


from different creditors because most ofthe cost of the loans would be incorpo-rated into the interest rate. A consumercould compare the interest rates on suchloans available from different creditors,without having to consider a variety ofdifferent discount points and originationpoints or fees that might be charged oneach loan.

All ThingsConsidered“Hell, there are no rules here—we’re tryingto accomplish something.”—Thomas A. Edison

The CFPB published its Proposals in orderto implement statutory changes made byDodd-Frank to Regulation Z’s currentloan originator compensation provisions.As I have indicated above, and as elabo-rated in Part I of this series, the Proposalsinclude a new, additional restriction onthe imposition of any upfront discountpoints, origination points, or fees on con-sumers under certain circumstances. Inaddition, the proposal implements addi-tional requirements imposed by Dodd-Frank concerning proper qualificationand registration or licensing of loan orig-inators. The Proposals also implementDodd-Frank restrictions on mandatoryarbitration and the financing of certaincredit insurance premiums. Finally, theyprovide additional guidance and clarifi-cation under the existing regulation’sprovisions restricting loan originatorcompensation practices, including guid-ance on the application of those provi-sions to certain profit- sharing plans andthe appropriate analysis of payments toloan originators based on factors that arenot terms but that may act as proxies fora transaction’s terms. In this article I haveoffered some insight into several of thesecategories.

There have been significant reviewsand comments offered by many firms,individuals, and associations. Let us nowbring back into discussion the topics cov-ered and view them from the viewpointof their potential impact on consumers,lenders, and loan originators. The posi-tions of the Mortgage Bankers Association(MBA), as stated in its comment letter onthe Proposals, are consistent with theviews of many industry participants.25 Forthis reason, I intend to follow some of itsinsights in construing a range of possibleeventualities.

Restrictions on UpfrontPoints and/or FeesThe idea of restricting upfront pointsand/or fees, while also requiring Zero-Zero alternatives can cause adverse con-sequences for consumers and mortgageindustry participants. If they both areimplemented, the outcome could lead toconsumers having less choice, not morechoice. For one reason, lenders mightreasonably be expected to withdraw from

allowing compensation to loan origina-tors based on commissions, whichinevitably means increased rates, a bur-densome outcome for the consumer. Thisis because lenders might need to retreatto a salary-based compensation plan inorder to compensate for the incrementalcosts involved in implementation.

Commission-based income is the back-bone of the market, and depriving themarket of that dynamic, financial incen-tive would surely lead to depressed out-comes. Consider the economic construct:if lenders do not have the opportunity toreceive points or fees from consumers,they will simply increase the rate to theconsumers in order to compensate; and,importantly, if consumers do not have theopportunity to buy down the rate throughdiscount points, they will not be able tolower their rates and their monthly pay-ments will be higher than they would beotherwise.

Zero-Zero AlternativePerhaps one of the most controversial ofthe Proposals is the Zero-Zero. As I men-tioned herein above, the restrictionagainst points and fees is lifted on com-mission-based compensation if the Zero-Zero is offered to the consumer. And,even in the event of the exemption, pointsand fees must result in a bona-fide reduc-tion in the rate.

For various reasons this poses a sub-stantial stress to risk management strate-gies. Notwithstanding the fact that mostlenders do not actually offer Zero-Zeropricing, the cost of funds to lenders, andsecondary market limits to rate expan-sion, may negate the possibility of a Zero-Zero option.26 This begs the question ofhow lenders are supposed to cover theircosts in order to offer such an alternativeloan, if the market structure itself mili-tates against such regulatory demands.

Loan size and state mortgage programswould be adversely impacted, becausethe former often originates through pre-mium pricing, which may not cover theZero-Zero costs, and in many cases thelatter do not permit fee variation bycharging points. Indeed, lenders wouldneed to cover costs through a premiuminterest rate that is likely to push many ofthem to add prepayment requirements orlimit the loans that are made available,because a Zero-Zero would have higherinterest payments and a greater risk ofprepayment.

But how would prepayment fees beimposed if Dodd-Frank imposes limita-tions on prepayment fees?27 The effect ofthis regulatory clash would be to drivesome lenders out of the market, or,absent prepayment fees, at least makesuch loans economically impossible.

These limits may force lenders toforego prepayment fees, making some ofthese transactions infeasible, or in somecases, leave the market entirely.

If all origination costs must be factoredinto the rate, additional loans would notcontinued on page 50

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expected to have known the amount ofthe closing costs in advance.

As in many regulatory matters, it is notwhat is included, but what is excludedthat is of pivotal importance. Forinstance, it is hard to comprehend why“costs attributable to non-affiliated thirdparties” may be included, but costs attrib-uted to affiliates are excluded. If a chargeis truly “unexpected,” what differencedoes it make if the charge arises from athird party that is or is not an affiliate?

An ongoing problem that has causedconsiderable concerns for my firm’sclients is that compensation is not per-mitted to be reduced in order to rectify anerroneous charge on the Good Faith

of a proxy, the method for identifying aproxy, and the examples of a proxy areinadequate and require further elabora-tion.

Pricing Concessions I discussed briefly in the Bans andRefinements subsection that theProposals state that a loan originator mayreduce compensation where there is anunanticipated increase in the closing costsattributable to non-affiliated third par-ties. To qualify for the exception, two con-ditions must be met: (1) the “unanticipat-ed increase” must result in the actualamount of closing costs exceeding legallimits or tolerances for such costs; and, (2)the lender or loan originator must nothave known or could not be reasonably

nate Community Reinvestment Actloans. (While MBA noted that “theCommentary indicates that the ‘geog-raphy’ is not a proxy and thus shouldpermit differing compensation for CRAloans, it would be helpful if the rulewere explicit on this point.”)

4. Differences in compensation toencourage the offering of good sus-tainable products to meet public pur-poses such as state agency or othergovernment program loans. (“Even ifsteering to these products was possi-ble, the products are beneficial to con-sumers. Moreover, some of these pro-grams restrict the amount of compen-sation to loan originators.”)

In my view, at this time the definition

be made, because the increment wouldlead to originating a high-cost or a high-er-priced loan.

What about the Zero-Zero’s effect onthe prospective Qualified Mortgage (QM)requirements? The MBA offers this sober-ing scenario:

“Should the Bureau include a minimumdebt-to-income ratio (“DTI”) in the QualifiedMortgage (QM) requirements, then offeringa zero-zero alternative (with a higher inter-est rate and greater monthly payments) willsignificantly raise the potential that forsome borrowers the increased DTI willexceed QM standards (thereby making theloan unavailable.) We cannot be certain ofthe shape or content of these other rulessince they are not yet finalized, but there isa very real possibility that the operation ofother laws may make many zero-zero alter-natives unavailable.”28

Risk management may be adverselyaffected by the Zero-Zero in that thisalternative loan product would material-ly alter the risk by rate increase, con-comitant mortgage payment increase,which could lead to defaults. The rela-tionship between points and fees and riskwould become distorted, since the mar-ket pricing parameters that account forrisk are skewed.

Defining Proxies In the Clarifications and Revisions subsec-tion above, I provided the two steps todefining a proxy for permissible andimpermissible differences in loan origina-tor compensation, pursuant to theProposals. Congress did not include aproxy concept in the Dodd-Frank loanoriginator provisions. It is clear, therefore,that Congress appears to have addressedsteering concerns through provisions thatexpressly address steering.

These steps are more of a litmus testthan actual examples encountered sinceApril 2011, when the loan originator com-pensation rules went into effect. This wayof defining an ‘unknown’ by extrapolatingit into a ‘known’ variable is fraught withlegal and regulatory compliance risk.

The Mortgage Bankers Association(MBA) offers some observations of exam-ples that should be included in the finalrule,29 in order to expand the understand-ing of how better to discern proxies forcompensation, specifically requestingthat the Proposals permit:

1. Differences in compensation based onquantifiable revenue differences tothe company because of market fac-tors. (“A loan that is brokered out of alender company—simply because thelender does not offer the product—and that brings in less revenue to thecompany should be a basis for lesscompensation than a ‘funded’ loan.”)

2. Differences in compensation based onquantifiable differences in the work ittakes for a loan officer to originate aloan should be explicitly permitted.(“Board staff indicated informally thatthis was permissible. Written clarifica-tion would be useful.”)

3. Differences in compensation to origi-

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Estimate (GFE). The lenders are forced toabsorb the cost of the error, rather thanbeing able to reduce the compensation toaccount for the error. Many theories havebeen pronounced as to why this aspect ofthe regulation is needed, most of whichseem unconvincing to me. Errors are notabstractly invented by lenders to circum-vent the Truth-in-Lending Act. The threatof TILA violations is a strong preventivemeasure.

The many reasons for removing thisprohibition are trumped even more bythe need to maintain an orderly market.Pricing competition is not an amorphouseconomic concept. It is a dynamic mech-anism that actually informs all marketparticipants of financial advantages anddisadvantages. The loan originator who isable to make pricing concessions is in theposition to respond promptly andassertively to market conditions, and suchadjustments tend to inure to the benefitof consumers. When the consumer bene-fits the market improves its stability.

Defining the Loan Originator“If one does not know to which port oneis sailing, no wind is favorable.”—Lucius Annaeus Seneca

Although lenders and brokers havebecome familiar with the definition ofthe loan originator, as described inTILA, various governmental issuancesand staff commentary, the Proposalsseek to revise the definition itself, asfollows:

� Existing definition: “a person whofor compensation or other mone-tary gain, or in the expectation ofcompensation or other monetarygain, arranges, negotiates or other-wise obtains an extension of creditfor another person.”

� New definition: “a person who takesan application, arranges, offers,negotiates, or otherwise obtains anextension of consumer credit foranother person in the expectationof compensation or other monetarygain or for compensation or othermonetary gain.”

The Commentary contains this inter-pretation of the new definition:

“… a person who assists a consumer inobtaining or applying for consumer cred-it by advising on credit terms (includingrates, fees, and other costs), preparingapplication packages (such as credit orpre-approval application or supportingdocumentation), or collecting applica-tion and supporting information onbehalf of the consumer to submit to aloan originator or creditor. A loan origi-nator includes a person who in expecta-tion or compensation or other gainadvertises or communicates to the public

that such person can or will provide anyof these services or activities.”

In addition, the Commentary wouldbe expanded to include “clerical” staff:

“Managers, administrative and clericalstaff, and similar individuals who areemployed by a creditor or loan originatorbut do not arrange, negotiate, or other-wise obtain an extension of credit for aconsumer, or whose compensation is notbased on whether any particular loan isoriginated, are not loan originators.”(Emphasis added.)

Firstly, the word “offers” is problematic.It makes an individual who is virtuallyunrelated to the loan origination process,mutatis mutandi, a part of a loan origina-tion transaction. Would a bank teller at aretail branch be an involved party if areferral is made to a loan officer within thebranch? Why would a person who has noactual involvement in the loan originationprocess be considered a loan originator?

Secondly, the Proposals should invokean opportunity to clarify that loanapproval functions are not deemed to beoriginating activities, when such loanapproval functions are conducted by“managers and administrative staff” and“similar individuals.” As it now stands, theCommentary states that managers,administrative staff, and similar individu-als who are employed by a lender or loanoriginator but do not arrange, negotiate,or otherwise obtain an extension of creditfor a consumer, or whose compensation isnot based on whether any particular loanis originated, are not loan originators.

The term “arranges” is also problemat-ic. It is much too broad, as witness theCFPB’s own statement that it “believes thatit includes any part of the process of origi-nating a credit transaction, includingadvertising or communicating to the pub-lic that one can perform loan originationservices and referrals of a consumer toanother person who participates in theprocess of originating a transaction.”30

There is no reason not to differentiateclearly and unambiguously the functionsof loan approval and originating.Although managers may approve certaintransactions, or have certain ‘override’privileges, such approval functions do notintrinsically need to be considered coreoriginating functions.

Thirdly, and finally, the term “clerical”is unfortunate, and it takes the definitioninto a much broader context than is prag-matically in accordance with the loan orig-ination process. Processors prepare appli-cation packages, collect supporting docu-mentation, and then submit the results tothe lender. Essentially, then, processorsshould be excluded from this definition;indeed, any individual should be exclud-ed who is an employee of a lender orloan originator and performs such pro-cessing tasks only as an employee forhis or her employer.

A Word o the Wise“Beware of false knowledge; it is moredangerous than ignorance.”—George Bernard Shaw

In this second part of the two partseries on the Proposals, I have dis-cussed many issues. But the topicsmentioned were selected by me toprovide a composite understanding.The actual Proposals are extraordi-narily nuanced, complicated, deeplydescribed and referenced, and con-tain many features that interact withother mortgage acts and practices.

The CFPB will issue a Final Rulethat will leverage these features andlikely add other non-negligible, regu-latory compliance requirements.Therefore, I should like to re-affirmmy opening remarks and urge you toseek a competent, risk managementprofessional in order to obtain reli-able and comprehensive guidancetoward implementing the forthcom-ing Final Rule.

Jonathan Foxx, former chief complianceofficer for two of the country’s top pub-licly-traded residential mortgage loanoriginators, is the president and manag-ing director of Lenders ComplianceGroup, a mortgage risk managementfirm devoted to providing regulatorycompliance advice and counsel to themortgage industry. He may be contactedat (516) 442-3456 or by e-mail [email protected].

Footnotes1-Foxx, Jonathan, Loan Originator Compensation:Past is Prologue – Part I, National MortgageProfessional Magazine, October 2012, Volume 4,Issue 10, pp 31-49.2-12 CFR Part 1026, Bureau of Consumer FinancialProtection, Truth in Lending Act (Regulation Z), LoanOriginator Compensation, Proposed Rule withRequest for Public Comment, Federal Register,Volume 77, Number 174, Sept. 7, 20123-See Section 609(b) of the RFA, as amended by theSmall Business Regulatory Enforcement Fairness Actof 1996 (SBREFA) and the Dodd-Frank Wall StreetReform and Consumer Protection Act.4-Final Report of the Small Business Review Panelon CFPB’s Proposals Under Consideration forResidential Mortgage Loan Origination StandardsRule-making, July 11, 2012.5-I have discussed loan originator compensationand qualifications rather extensively. For instance,see Foxx, Jonathan, “Landmark FinancialLegislation: New Rules for Mortgage Originators–Part I: Reformation and Regulations,” NationalMortgage Professional Magazine, August 2010,Volume 2, Issue 8, pp 28-42; Foxx, Jonathan, A “NewEra of Mortgage Reform–Part II: Legislation–Reactive or Proactive,” National MortgageProfessional Magazine, September 2010, Volume 2,Issue 9, pp 22-28; Foxx, Jonathan, “A New Era ofMortgage Reform–Part III: Consumer FinancialProtection–Bureau and Bureaucracy,” October2010, Volume 2, Issue 10, pp 22-40; Foxx, Jonathan,“The Birth of an Agency,” in National MortgageProfessional Magazine, September 2009, Volume 1,Issue 5, pp 24-27; and, Foxx, Jonathan, “The CFPAControversy: Asking the Tough Questions,” inNational Mortgage Professional Magazine, October2009, Volume 1, Issue 6, pp 22-25. All Newslettersand Articles through 2011 are available at:http://Publications.LendersComplianceGroup.com.Also: Op. cit. 1.6-Dodd-Frank, Section 1403, includes a directive forthe Federal Reserve Board to adopt regulations to

implement various prohibitions against steering andrelated conduct. The CFPB has not yet proposedrules to implement the prohibitions; however, suchprohibitions will obviously affect loan originatorcompensation.7-In developing a narrative regarding the rules, I willdraw on the issuance in the Federal Register (Idem2) as well as the CFPB’s own Summary of ProposedLoan Originator Rules, issued in accordance with theaforementioned Federal Register notice.8-In this article I will refer to creditors as “lenders.” 9-This rule would apply to closed-end mortgagetransactions.10-The Zero-Zero requirement would not be “trig-gered” by charges that are passed on to independentthird parties that are not affiliated with the lender ormortgage broker.11-Discount points and origination fees are payableat or before consummation by the consumer to acreditor or a loan originator organization, exceptfor: (1) Interest, including per-diem interest; (2) anybona-fide and reasonable third-party charges notretained by the creditor or loan originator organiza-tion; and (3) seller’s points and premiums for prop-erty insurance that are excluded from the financecharge under § 1026.4(c)(5), and (d)(2), respectively.12-On Aug. 26, 2009, the Federal Reserve Board pub-lished a Proposed Rule in the Federal Register per-taining to closed-end credit. As part of that propos-al, the FRB sought to prohibit certain compensationpayments to loan originators and steering con-sumers to loans not in their interest because itwould result in greater compensation for the loanoriginator. On July 21, 2010, the Dodd-Frank WallStreet Reform and Consumer Protection Act (Dodd-Frank) was enacted into law. Among other provi-sions, Title XIV of Dodd-Frank amended the Truth-in-Lending Act (TILA) to establish certain mortgageloan origination standards. And on July 21, 2011,pursuant to Title X of the Dodd-Frank, the ConsumerFinancial Protection Bureau received its exclusiverule-making and examination authority from theFederal Reserve Board over Truth in Lending Act andits implementing regulation, Regulation Z. Due tolitigation, the April 1, 2011 implementation datewas temporarily stayed. The stay was dissolved. Theeffective compliance implementation date of theFinal Rule was April 6, 2011.13-There were 17 SERs selected for the SBREFAprocess. The CFPB convened the Panel on May 9,2012. The CFPB provided the SERs with an oppor-tunity to submit written feedback or comments.The original due date was June 4, 2012, but at therequest of several SERs, and in light of the addi-tional calls, the deadline was extended to June 11,2012. The CFPB received written comments from11 of the SERs and shared these comments withthe other members of the Panel. SERs were fromcommercial banks, credit unions, mortgage com-panies, mortgage brokers, and non-profit housingorganizations.14-By “substantially,” the CFPB’s Proposal leavesopen a precise definition, though it requests com-ment on whether this term is sufficiently clear and,if not, what other terms should be considered. 15-§ 1026.36(a)(3).16-§ 1026.36(d)(1).17-§ 1026.36(d)(1)–5.18-Op. Cit. 1.19-§ 1026.36(d)(1)–7.20-Op.cit. 2, p 55295.21-Safe harbor is available under § 1026.36(e).22-Op.cit. 2, p 55313.23-Op.cit. 2, p 55315.24-§ 1026.24(d).25-MBA Files Comment Letter on Loan OfficerCompensation and Qualification, issued to membersof MBA on 10/16/12 via e-mail from David H.Stevens, president and CEO of the Mortgage BankersAssociation. The e-mail includes an Appendix, draft-ed by Buckley Sandler LLP, addressed to theMortgage Bankers Association and the AmericanBankers Association, entitled “CFPB’s Authority toExclude Certain Statutory Requirements From itsLoan Originator Rules.”26-Op. Cit. 1.27-Dodd-Frank establishes a new HOEPA trigger forloans with prepayment fees applicable for morethan 36 months.28-Op. Cit. 25.29-Ibid.30-TILA § 103(cc)(2)(C), as enacted in Section 1401Dodd-Frank.

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By Carey Hollander

Is our government“anti-American” whenit comes to regulatingthe mortgage indus-try? While manythrow this term

around in an irresponsible manner,one thing is certain: government regu-lations designed to prevent anothermortgage meltdown have hurt the

industry and the real estate recovery.These new regulations clearly demon-strate a disconnect between Congressand the way the mortgage industry real-ly works.

Take this example: The AppraiserIndependence Requirements (AIR),effective as of Oct. 15, 2010, were devel-oped by Fannie Mae, the FederalHousing Finance Agency (FHFA), FreddieMac and key industry participants toreplace the Home Valuation Code of

Not So Free Enterprise in theMortgage Industry

Conduct (HVCC). Basically, this legisla-tion prohibits banks from orderingappraisals directly from an appraisalcompany and prevents loan productionstaff or any other person who is com-pensated on a commission basis fromengaging in communications with theappraiser.

AIR was intended to prevent anyparty from coercing or influencingappraisers in any way to produce adesired value for a residential property.Its true effect has created many unin-tended consequences.

The effects of AIR onloan processingThe effects of AIR include many ineffi-ciencies and damage to both the

appraisal and mortgage industries, andultimately hurt the consumer.

The procedure seems very simpleand straightforward: Appraisals onFannie Mae and Freddie Mac loans mustbe ordered through an appraisal man-agement company (AMC) that thenplaces the order directly with anappraiser. The AMC picks the appraiserindiscriminately, then subsequently for-wards the appraisal to the lender after ithas been reviewed and scrutinized.

This procedure, however, creates sev-eral problems. First of all, it adds anadditional layer between mortgage pro-fessionals and their customers, resultingin inevitable delays at best and poten-tial misunderstandings in a processalready beset by complexity and intri-cate requirements.

Responsible lenders lose control overthe process and are unable to selectprofessional appraisers with local realestate knowledge, experience andexpertise at their jobs. This, in turn,leads to increased appraisal challengesand disputes caused by inexperience orunfamiliarity with the area.

In the end, AIR causes more work forloan processors and underwriters withfew discernible advantages.

The impact of AIR on free enterpriseEven if we submit, for argument’ssake, say that AIR prevents “badactors” from taking advantage of con-sumers, this is not the tried and trueremedy in our economic system. AIRremoves the freedom of choice bylenders to select appraisers who mar-ket their business and services in acompetitive manner and compromisesthe recovery of both the mortgage andreal estate industries.

AIR has severely damaged theappraisal industry by negating the abili-ty of appraisers who have built up agood reputation and improved theirbusiness honestly. Instead of reapingthe rewards of their hard work, theymust now rely on “taking their turn”from the AMCs. Unable to freely markettheir services to lenders, many goodprofessionals have left the industry.

AIR artificially categorizes allappraisal companies as equals. Whatwould happen if our governmentforced us to choose our doctors in thesame way, just because a few quacks, asmall fraction of the total, took advan-tage of their patients? Or for a mort-gage industry analogy, what if wemade buyers select their dwellings inan artificial manner instead of lettingthem hunt and find their dreamhome? As mortgage professionals, wedeserve the same rights within ourown industry as are afforded every-where else.

Carey Hollander is a retail sales managerfor Guaranteed Home MortgageCompany, a licensed mortgage invest-ment and banking firm comprised ofmore than 300 mortgage professionalslending in 28 states. For more informa-tion, e-mail [email protected].

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When did we forgetthat mortgage brokersare the face of eachhome loan?

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In our crazy world of mortgage securitization and lender

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Mortgage Fraud: Wrestling With theOctopus ... and Winning!

By Greg Holmes

Mortgage fraud definitely has not dis-appeared since a foreclosure crisishelped bring the American economyto its knees. In fact, fraud is occurringmore often and in a wider variety offorms. Industry professionals are find-ing that protecting yourself againstthis new generation of mortgagefraudsters is like wrestling an octopus;as soon as you triumph over onepotential source of shady dealing,seven others are standing behind it tocontinue the struggle.

Current crime statistics prove thatthe battle is definitely ongoing. TheU.S. Treasury Department’s FinancialCrimes Enforcement Network (FinCEN)reports a 31 percent increase inreports of suspicious mortgage activi-ty between 2010 and 2011. Therewere more than 96,000 instances ofsuspicious activity in 2011, and 2012shows no indication of a meaningfulreverse in the trend.

A recent FBI report on financialcrimes pinpoints a key cause of newconcern. It notes that fraud cases arediversifying as well as increasing. “Forthe first time in recent history,” theBureau stated in its latest FinancialCrimes Report to the Public, “dis-tressed homeowner fraud has dis-placed loan origination fraud as thenumber one mortgage fraud threat inmany offices.” Though the FBI consid-ers loan origination infractions moreegregious because of the larger dollaramounts involved, the Bureau “hasnow adapted its focus to include othernew and emerging schemes.”

Beware of new tentaclesTraditionally, mortgage professionalscould focus their efforts only on spot-ting financial misrepresentations byapplicants seeking mortgages theycan’t afford. It is now necessary tobroaden the focus to encompass awhole host of scams.

� Social Security Number (SSN) fraudand identity theft: Use of a socialsecurity number or a governmentidentification card that belongs to

someone other than the applicant,either to obtain a mortgage or toperpetrate a “fraud for profit”scheme.

� Income fraud: Overstating incometo qualify for a larger mortgage, orunderstating income to gain ahardship discount or become eligi-ble for a government subsidy.

� Liability fraud: Failing to list sig-nificant personal debts in anapplication, preventing lendersfrom accurately assessing borrow-ers’ ability to repay.

Arming against the octo-pusWhen you consider the variety of waysmortgage lenders can be victimizedby scammers and fraudsters, it is easyto see why traditional forms of fraudprotection are proving inadequate fortoday’s tasks. Fighting this particularoctopus means battling with all itsvarious tentacles at once, thus allow-ing mortgage professionals whoadminister the process to recognizethe signs of a swindle in the making.

Fortunately, technology has cometo the rescue of an overburdenedmortgage industry. Today’s profes-sionals can draw on an unprecedent-ed wealth of computerized customerdata. Powerful software can mine thistreasure trove to uncover more subtletrends in borrowers’ habits and back-grounds than ever before, revealingfacts that previously wouldn’t haveshown up on lenders’ radar screens.

One of the most important datatools at a fraud fighter’s disposal isquality control technology such asUndisclosed Debt Monitoring, a tech-nology pioneered by Equifax. Thisservice monitors a borrower’s creditactivity during the “quiet period”from the moment the original creditfile is pulled to the day a mortgageloan is closed. The popularity of thisservice has been spurred in part byFannie Mae, which recommends thatundisclosed debts be verified as part

of its Loan QualityInitiative (LQI) guide-lines. Freddie Mac makesthe same recommenda-tion as part of itsResponsible LendingGuidelines.

Quality control tech-nology automaticallyalerts a lender of anypotentially risky activityor misrepresentationduring the loan’s quietperiod. Credit inquiries,tradelines or secondaryreissues are immediatelynoted, and the lender isnotified in a user-friend-ly report that makesquick, easy work ofinvestigating any dis-crepancies. The qualitycontrol technology is also a discreetand effective way of determiningwhich of your customers are “shop-ping around” with other mortgageloan providers. Salespeople can usean alert as a sign that the borrowerneeds more personalized attentionand added reassurance that yourcompany’s offer is worth accepting.

Borrowers can benefit from qualitycontrol technology as much as lenderscan. A borrower in the mortgage orig-ination process may unwittingly get anew piece of furniture or take out anadditional credit card, changing theirdebt-to-income ratio and jeopardizingthe loan closing. The borrower’s loanofficer is immediately notified of thechange, affording them plenty of timeto work with the borrower to clear upcredit issues and close the mortgageloan on schedule.

Quality control technology is onlyone of the many technologies avail-able to make the mortgage loan origi-nation process smoother and morefree from fraud. A few of the othervaluable mortgage fraud preventiontools include:

� Tax Return Verifications: A varietyof service providers have devel-oped ways to improve the other-wise cumbersome and slowprocess of comparing the taxreturns a borrower submits withthe actual data on file at the IRS.Tax Return Verification technologyinstantly highlights any items aborrower has failed to disclose,

including self-employ-ment income and non-reimbursed businessexpenses. As a time-sav-ing bonus, it also allowsthe underwriter to com-plete a cash flow analy-sis using reliable, IRSvalidated data. In addi-tion to verifying a bor-rower’s income, TaxReturn Verification con-firms a borrower’s SocialSecurity number bycomparing it to the cor-rect SSN on the originaltax forms. If the twonumbers don’t match,it’s time to start askingquestions.

� Identity Validation:Addresses the 60 percent of mort-gage fraud that involves identifica-tion discrepancies. It provides avalidation score, specific warningmessages, household income esti-mates, and checks of watch lists.

� Social Security Number (SSN)Verification: Establishes the legiti-macy of the applicant’s SSN andname combination, along withconfirmation that the SSN andname are not on the SocialSecurity Association death masterlist. This tool meets Fannie MaeLQI requirements.

� Mortgage Participant Report: App-licants are automatically checkedagainst industry watch lists (OFAC-SDN, GSA-EPLS, HUD-LDP, andappraiser license data.)

Taming the beast withred flagsWhile the availability of such power-ful tools is heartening, it can also be achallenge. Mortgage professionals arealready overburdened with the tasksof seeking new clients and managingthe flurry of loan paperwork neces-sary in today’s transactions. It’s toughto juggle all the elements of the nor-mal origination process while simul-taneously implementing a matrix ofindependent fraud tests, then cob-bling together the results into acoherent picture of a client’s creditworthiness. This already murky pic-ture is being further clouded by the

“Quality controltechnology

automatically alerts alender of any

potentially riskyactivity or

misrepresentationduring the loan’s quiet

period.”

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identity fraud detection mandates ofthe Federal Trade Commission (FTC)under its Red Flags Rule, instituted in2011. The Rule requires financialinstitutions and creditors to imple-ment a written program to detect thewarning signs of identity theft, andrequires lenders to systematicallyincorporate the elements of the pre-vention program into their dailyoperations.

Clearly, this mandate presents achallenge to mortgage industry pro-fessionals. Sensing an opportunity,the credit reporting industry hasresponded with a new generation ofproducts that package a set of RedFlag identity theft instruments into aform that makes implementationeasier.

If you ask any successful mortgage

professional about industry trends,you will get an earful about a loanorigination process that is already toocomplicated and growing moreunwieldy every day.

Lenders need to welcome a new setof solutions. This set of solutionsshould ideally prevent them from get-ting wrapped up in the tentacles of afraud detection regimen that drownsthem with paperwork, while also hav-ing a monstrously significant impacton their customer relationships andtheir company’s profitability.

Greg Holmes is national director of salesand marketing at Salisbury, Md.-basedCredit Plus Inc., a provider of credit andmortgage information services since1928. He can be reached by e-mail [email protected].

decisioning widen themargin for error wherethere should be none.Pricing and eligibility forloan programs aren’tnearly as tightly tied toinvestor guidelines forpost-closing delivery asthey should be.

A challenge topush forwardMortgage technology hascome a long way inrecent years. A numberof viable tools arealready available, with anew breed of solutionsno doubt waiting in thewings to further enhancethe way we do business. Still, thereremains a great deal of work to bedone in tightening up the lendingprocess. Technology vendors need todiligently focus on finding innovativeways to integrate automation into theentire process, including all businessrules and work flows.

If lending institutions, mortgagetechnology providers, and regulatorspartner more closely on identifying thegaps and potential areas for enhance-ment, we can speed momentum towardthe next level of automation—a levelwhere improved compliance and riskmitigation become achievable, the pos-sibility for human error is reduced, andstaff members can turn their focustoward more intelligence-based tasksrather than being relegated to pushingpaper. Incorporating event-basedprocesses would allow the user to effec-tively focus on execution with minimumdisruptions or manual interventions.New, robust tools are required to helplending organizations adapt to the con-stantly changing legislative environmentwhile maintaining a low tolerance fordefault. For most organizations, maxi-mizing value and delivering qualityloans is the expectation rather than thegoal, the main objectives for infusingautomation enhancements into thelending process would be to reduce orig-ination cost, minimize origination timeand maximize product quality, whileenabling an enhanced experience forthe loan officer, broker and borrower.

Resetting the barSo, how can automation further

One of today’s undisputed facts is thattechnology can improve pretty muchanything in business. Across multipleindustries, the ability to automateprocesses via innovative solutions hascreated a level of efficiency that ourculture has come to rely on.

The mortgage lending industry, inparticular, places a significant empha-sis on technology—with automationbeing the cornerstone—to streamlineits processes and ultimately, producequality loans. The better mortgagetechnology gets, the more we ask of itto further enhance our businessprocesses.

In the beginning …The rise of mortgage technology camewith the introduction of loan origina-tion platforms, which are still usedwithin the industry by banks, creditunions, mortgage bankers and bro-kers alike for loan marketing, pre-qualification, origination and process-ing. While incorporating such softwaremakes a dent in streamlining the loanprocess, it also dictates a reliance onsmall desktop applications, essentially

acting as a single, non-networkeddatabase program with limited func-tionality. Storing data in one placeputs a burden on staff members tomove and manage files from one stageto the next throughout the lendingprocess and requires each individualworking with the data to have signifi-cant knowledge of the originationsprocess and current compliancerequirements. The potential result isan obvious compromise in dataintegrity, a lack of coordinated com-pliance checks, ineffective delivery tothe secondary market and a generallyinefficient process.

While loan origination software hasits place in the market, most organiza-tions utilizing these platforms haveslowly started to layer in various addi-tional automation solutions to protectthemselves and their customers.Single-point solutions have given wayto networked data and cloud-basedsystems. Still, the system today largelyremains manual in nature and expert-ise-driven. Cumbersome workflowprocesses and designs with limitedcompliance checks and rules-based

A Call for Automation: The Key toDriving Quality and Efficiency in Lending

By Scott A. Reed

enhance the industry’sproductivity, integrityand deliverability?Where exactly do we gofrom here?

From my perspective,we start by taking a hardlook at quality controlmeasures and evaluateopportunities to makethem more foolproof.There is definitely roomfor improvement! In anideal scenario, checksand verifications shouldseamlessly run behindthe scenes in real-timethroughout the loanprocess as opposed to atone or two stages.Everything starts and

ends with that idea in mind.The following are a few of the

“must have” items on the roadmaptoward improving quality control andefficiency through automation.� Income verification: From the

onset of the application process, aborrower’s tax and income verifica-tion must be completed correctlyso that any possible red flags canbe raised in a timely fashion.Incorporating a process flow where4506-T requests are automaticallycompleted would assure income isverified before any additional pro-cessing can occur. Data validationand integrity rules enforce accura-cy and a tight integration withexternal vendors ensures a seam-less interaction. Checks such as thisshould be repeatedly evaluatedthroughout processing and funding sothat appropriate actions can be takenas necessary.

� Background checks: Currently,requests for background checks onthe individuals associated with atransaction are handled manually.This requires a substantial amount oftime and diligence, especially consid-ering the number of individual partiesassociated with a single transaction,which can include appraisers, closingagents, escrow agents, brokers, titleagents, loan officers, and a number ofother professionals. Additionally, ithas become increasingly important tovalidate the borrower’s relationship

“Technology vendorsneed to diligently

focus on finding inno-vative ways to inte-

grate automation intothe entire process,

including all businessrules and work flows.”


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a call for automation continued from page 45

with all of the parties involved in atransaction to ensure that the transac-tion is being conducted at arm’slength. This process alone has thepotential to slow down the delivery ofa loan and invites opportunity forhuman error to occur, thus affectingloan quality. Automated verification that all people

involved in the real estate transactionare properly licensed, checked againstexclusionary lists and cleared viathird-party background checks wouldalso benefit the process, as this wouldremove uncertainty concerning thelegitimacy of any party’s individualrole in the process.

Appropriate databases to run thesechecks against would includeinvestor/government-sponsored enter-prise (GSE), warehouse facilities, theU.S. Department of Housing & UrbanDevelopment (HUD) and the Office ofForeign Assets Control (OFAC).

In an ideal scenario, these checkswould automatically be conducted inreal-time, stage-to-stage, from appli-cation through closing, just in casesomething was to pop up in the mid-dle of the transaction that could affecta loan’s legitimacy.

Loan pricing and eligibilityTo eliminate unwanted and unneces-sary surprises at closing, qualificationchecks concerning loan price and eli-gibility should be routinely conductedand repeated throughout the lendingprocess, as opposed to at the verybeginning and the end. Any changes toloan programs, debt-to-income ratios,loan amounts or credit profiles shouldbe noted in real time and automati-cally trigger adjustments or notifica-tions when they cause the loan to falloutside of its set parameters.Automation is essential here, sinceconstantly repeating these checksthroughout the process manually istime consuming and allows for humanerror.

Automated underwritingAn analytical comparison of real-timefindings between an organization’sautomated underwriting system andits current data is needed. Conducting

an automatic and ongoing audit ofinitial underwriting findings and loandocumentation while the transactionis in process is crucial to detecting crit-ical errors that might either prevent agood loan from being approved orpush through a loan that may nolonger meet eligibility. Whenever aloan’s qualifications change or extendbeyond the parameters of the auto-mated underwriting system’s findings,this would trigger the necessary notifi-cation and resolution.

Loan deliveryIf it became possible to automaticallydetect critical issues concerning loandocuments during the post-closingprocess and prior to delivery, theappropriate modifications could bemade before delivery of the final loanpackage, thus eliminating any needfor corrections after the fact. Theresult would be a more streamlineddelivery of the loan to the investmentcommunity and reduced expense tolenders.

At funding/closing, the systemwould ideally compare loan docu-ments to corresponding data, checksignatures for accuracy and flag anyblank boxes when documents arereturned seemingly completed. Theresult would be a more efficient,cleaner delivery of the loan.

As we move into 2013, there are anumber of solutions in developmentin the industry intended to bring us afew steps closer to meeting theseneeds. Automating the origination,compliance and loan delivery processis crucial to realizing what is desper-ately needed in the industry—improv-ing the customer experience, reducingthe time of the origination processand improving quality.

Scott A. Reed is senior vice president ofadministration for Carrington MortgageServices LLC’s Mortgage Lending Division,where he is responsible for compliance,process improvement, vendor manage-ment, training and the implementation ofpolicies and procedures. Scott holds aCalifornia broker’s license, and has a bach-elor of science degree in finance fromArizona State University. He may bereached by phone at (949) 517-7000.

How Far Will You Go?Taking your business on the road

By BJ Bounds

When it is your own business, youhave to own it. Those of you who havesucceeded in your businesses andthose on the road to success knowexactly what I am talking about. Thereis no eight-hour work day with a one-hour lunch and then yougo home. You work whenwork comes, and thatcould be any time of theday or night. And, it fol-lows you everywhere …wherever you are, it isimportant that you canstay on top of yourpipeline and constantlybring in additional busi-ness. Just how far willyou go with your busi-ness? How far can yougo? With technology inyour back pocket, youcan decide for yourself.

We have all heardabout the importance ofhaving a Web presencethat works for you 24hours a day, bringingyou business and giving your poten-tial clients a glimpse into who you areand why they should want to workwith you instead of your competitors.Your personalized Web site is not onlytailored for your business, but it isalso tailored for the clients you seek.Design and messaging gives your visi-tors the information they need todetermine if you are the business theywant to work with. And then they canbegin the process of applying rightthere on your Web site. That is atremendous step for them, but fortoday’s tech-savvy buyers, the conven-ience and real-time experience shouldnot end there.

Your Web site can and should be somuch more than just a marketing andapplication platform. Integrating yourWeb site with your loan originationsoftware (LOS) can give you so muchmore than you would expect fromsuch a technology blend. Instead ofusing your site to bring people in, youcan actually use it to communicate

and exchange information and docu-ments throughout the loan process.Once your site and your LOS starttalking, there is no stopping them—and that is what you need to makeyour loan process efficient and con-

venient for you andyour clients.

When your Web sitevisitors decide to startthe application process,you want them to beable to do it right then.The time it takes forthem to call you ordownload and print apaper application istime during which anynumber of distractionscan take place and thespell can be broken.Don’t take that chance!Make sure you haveonline application func-tionality! Then, makesure those applicationsdrop into your LOS soyou do not have to re-

key important data.Now that you have the application

in the system and your applicant isnow a “borrower,” staying on top ofthe loan while in process is highlysignificant for compliance purposesand customer satisfaction. Knowingwhat is coming and going keeps youon top of your files at all times. Toachieve that type of autonomy, youneed to be able to see your fileswithout being tethered to your deskat the office and the knowledgeablecommunication you will be able tooffer your clients helps build lastingrelationships and will make theentire process more pleasant foreveryone. Your options here can giveyou the freedom and mobility youwant with the productivity you needin the office or anywhere else.

The most “mobile” option you havefor mobile productivity is the LOSmobile application. A mobile appsynched to your LOS is an excellenttool for on-the-go prospecting and

“Instead of using your site to bring people in, you canactually use it to

communicate andexchange information

and documentsthroughout the loan

process.”

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oversight. No matter where you are,you can capture basic information onyour smartphone that drops into anew borrower file in your system.Simply connecting to your LOS viacloud technology allows you to startor edit loan files on your phone thatare then synchronized as part of yourbustling pipeline.

Mobile apps also make starting ini-tial borrower or third-party files fromyour phone’s contact list fast andeasy. The convenience of mobile appsfor business on the road is tremen-dous. Depending on your smartphoneand service provider, you can checkthe status of a loan file for a borrowerwhile you are on the phone withthem! So, even though you might notwant to do excessive data entry onyour phone on a regular basis, youhave the ability to calculate loanamounts, monthly payments, terms,etc. when it counts for customer serv-ice. Mobile apps give you real-timeaccess and information on everythinggoing on in your business. Using yoursmartphone as an extension of yourbusiness resources gives you time andfreedom.

To get the maximum use out ofyour in-office business tools, youshould ensure your LOS platform is asflexible as you are. By implementinga server-based system, you can accessand work your files anywhere youhave a secure Internet connection.Such a system would allow a secureworkflow and instant oversight intoevery file in process. You would alsohave access to your built-in contactdatabase without ever having toworry about losing sensitive databecause nothing is stored on a localdrive.

The integration between your Website on the front end and your LOS onthe back end enables communicationbetween you and your client as theloan progresses throughout theprocess. From your LOS, you canupload documents for signature orsimply send requests for documentsto your borrower. The borrower canaccess the documents or requestsfrom a secure log-in on your Web site,then return the documents by scan-ning and uploading. Once you getthem, they drop directly into the file’sdocument management system.

Flexibility and efficiency alsocomes from integration within your

LOS. Third-party vendors are lined upto take your business straight fromyour borrower files. You never have tore-type or re-key information to ordercredit, closing docs, appraisals, or anyother of your typical documents andservices. They are all right there tosave you vast amounts of time andenergy during each step of theprocess.

Your LOS platform should also beconfigurable with easy-to-implementbusiness rules that give you the peaceof mind that even though you are notin the office, your compliance proce-dures are in place and enforced. Withbusiness rules, you can apply hard orsoft stops to fields or screens to pre-vent legislative requirements fromslipping through the cracks of yourloan pipeline. Instant access to cus-tomizable reports also serves to helpyou stay on top of your workflow andcompliance.

Technology has made remarkablestrides over the past few years. Nowthat we have cloud-based technology,we have much less hardware to main-tain. When we combine our relatedcloud technologies into systems thatwork the way we do, we increase ouraccuracy and production effective-ness. That is why first integrating yourWeb site and LOS can provide a signif-icant boost to your efficiency.

Then, introduce your business tothe forward technology that you usefor everything else in your life, yourmobile phone. Taking your businesson the road is more important thanever as our lives demanding greaterchunks of our time and energy.Keeping up with compliance in themortgage industry is a full-time job initself if you do not let your technolo-gy work for you when you need itmost. Integrating your business toolsfor on-the-go productivity is a signifi-cant part of driving success in today’smarket.

BJ Bounds is senior marketing communi-cations specialist for Calyx Software. Inaddition to media relations and copy-writing, BJ is a contributing author tothe Calyx Software blog, CalyxCorner.She has more than 10 years of experi-ence in sales and corporate marketingwith a focus on technology that spansseveral industries. She may be reachedby phone at (800) 362-2599 or visitwww.calyxsoftware.com.

Future of Lending: Data-Driven LendingBy Rob Pommier

The old document-centered mortgageprocess of the last two decades is chang-ing. Lenders must leave the time-inten-sive, paper-intensive loan cycle andfocus their resources on adata-centered process.The transition to a data-centric workflow will bet-ter equip lenders as awhole and revolutionizethe mortgage industry weknow today.

Although the benefits ofmigrating away from adocument-centered mort-gage cycle are impressive,there is often some hesita-tion within the industry.While resistance to changeis not an uncommon phe-nomenon, the crash of2008, resulting in stagna-tion of the housing mar-ket, have made lendersgun shy to invest in newtechnologies. In all actuality, the contin-ued use of today’s loan origination sys-tems will only further repress the recov-ery of the mortgage industry as lendersremain heavily restricted by a tedious,inefficient method of loan generation.

The effectiveness of data-driventechnology will be multiplied byembracing process services. BusinessProcess as a Service (BPaaS) leveragesthe data from tomorrow’s mortgageoperating systems and provides theservices needed to reduce costs and cuteven more time out of the loan cycle.

The problem with doc-driven loan originationDocument-driven processing is nolonger the best option for mortgagelenders to work with. The outdatedprocess wastes valuable time andmoney, does not scale well and lacksthe level of transparency investor’sdesire. Even some current solutions thatmarket themselves as eMortgages con-tinue to rely on document-driven pro-cessing, which results in little to nochange in the amount of time spentworking through the loan lifecycle. Theloan document still has to pass throughorigination, processing, underwriting

and closing one by one, which preventsother staff members from working onthe loan simultaneously.

The total process still takes anywherebetween 17 and 150 days tocomplete and results in atotal cost ranging from$1,000-$2,500. Utilizing afactory-style work processwas reasonable when loanfiles were still paper docu-ments, but the style isobsolete. Not only doesthis approach to process-ing require more time andmoney, but it does notprovide the desired level oftransparency, often pre-venting investors fromevaluating their loan untilafter closing.

Data-driven loancycle saves timeand money

The differences between document-dri-ven and data-driven workflow may looksubtle form the outside, but the resultis dramatic. The key is a mortgage tech-nology platform that feeds the stan-dardized loan data to all pieces of theloan cycle in real-time, eliminating the“factory line” of today’s systems. Byrelying on data over documents,lenders have the freedom to work onpieces of the loan they want withouthaving to wait on their partners to fin-ish, thus reducing cycle time.

By building the workflow around acentral datacenter, the lender enablesmultiple departments to work on theloan at the same time. In conjunctionwith this technology, automated deci-sioning capabilities provide for a morestreamlined process, virtually eliminat-ing the need for manual evaluation andquality checks with each step of theloan cycle. The automated decisioningfunction can also immediately evaluatedata within specific criteria to provide afinal assessment.

Data-focused origination also pro-vides clearer transparency and moreaccurate risk analysis. As origination

“Lenders must leavethe time-intensive,

paper-intensive loancycle and focus their

resources on a data-centered

process.”

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future of lending continued from page 47

staff and underwriters finalize the loanfor closing, investors and secondarymarketers can access the loan file at anystep. This provides them the ability andflexibility to evaluate risk, set pricingand arrange mortgage-backed security(MBS) packages in parallel with the loanworking its way to closing. When a data-centric loan platform is combined withprocess orchestration, the averagelender can cut up to 30 percent of moreoff the time and cost needed to com-plete a loan.

Introducing the MOSAs technology in outside industries, suchas mobile, continues to change andadvance, mortgage technology is heavilyinfluenced by the success of these indus-tries various operating systems whichresults in the implementation of similarofferings tailored to mortgage and lend-ing. For example, since the introductionof Apple’s iPhone in 2007, companieshave scrambled to develop applications(apps) iPhone users can download direct-ly to their device based on what they areinterested in.

This philosophy can be transferred tothe mortgage industry in that no lenderhas the exact same technology needs asanother. The latest advancements inmortgage technology now allow lendersto add apps to their mortgage operatingsystem or “MOS” to meet their specificneeds. If the lender no longer sees aneed for an app, it can be removedwithout impacting the functionality ofthe MOS and its remaining apps. Just asiPhone users vary in the way they usetheir phones, lenders vary in the waythey prefer to conduct business. Data-driven systems grant lenders the abilityto select the apps they want in order totailor their loan system as they see fit.By allowing for multiple apps to beadded to the MOS, lenders now havethe power to expand the clientele theyserve due to the variation of servicesavailable through the apps.

Add on BPaaS to maximize efficiencyWhile data-driven automation servicesare one of the fastest growing areas oftechnology growth, lenders can alsobenefit by moving business processservices to the cloud. Traditionally,lenders who wanted to utilize a third-

party service for processes, such as settle-ment services would have to sign exten-sive monthly contracts and pay for a cer-tain amount of bandwidth, regardless ofwhether it was used or not. BPaaS buildson the benefits of cloud-based softwareby providing processes and expertisethrough a pay-per-use model.

Much like data-focused softwareremoves the barrier of expensive instal-lations, BPaaS does not require a heavyupfront investment in new infrastruc-ture, which enables fast entry into newmarkets and smooth setup of opera-tions in new geographies.

For example, a lender can work witha BPaaS service to provide support formortgage origination, enabling interac-tion between the many players and par-ties involved in the transaction. Theycould enhance that support with docu-ment management to streamline com-munications—and all of it is availableon demand, in real-time.

Ultimately, BPaaS enables lenders tohave greater end-to-end flexibility andeffectiveness in their operations andprovides options that can dramaticallyimprove processes without requiring amassive influx of capital.

BPaaS can be as extensive or as mini-mal as necessary to meet the lender’sneeds. BPaaS solutions can enhance indi-vidual parts of the process or re-tool theentire workflow into an effective end-to-end workflow. BPaaS is also a real con-sideration for lenders facing majorchanges, such as acquisitions or enteringnew states. The ability to apply the sametechnology standards easily across theentire enterprise makes a combination ofdata-driven technology and BPaaS alower cost, lower risk option.

Based on the current capabilities ofdata-driven systems, the reign of docu-ment-driven technology seems to becoming to an end. By embracing newtechnologies that allow for customizedprograms and improved functionality,lenders can better manage their employ-ees and improve client satisfaction.

Rob Pommier is vice president of busi-ness development for Genpact MortgageServices and is responsible for the devel-opment, sales and marketing of the com-pany’s Quantum Mortgage Technologyplatform. He may be reached by e-mailat [email protected].

Business Units: No Longer IslandsBy Sanjeev Dahiwadkar

Change can be good; however, itdepends on your perspective. Thesedays, you might be hard-pressed to findmany mortgage-related companiesexcited about the changesbrought about during thelast five years. In fact,some mortgage profes-sionals said change wasinevitable due to some ofthe industry’s flawed busi-ness practices. Whetheryou see change as good orbad, one of the uninten-tional side effects of thenew regulations such asthose under Dodd-Frankand those proposed by theConsumer Finance Protec-tion Bureau (CFPB) is thatmortgage lenders and ser-vicers are forced to reevalu-ate the cost of doing busi-ness. Technology is one ofthose costs, and it is becom-ing a larger piece of theirbusinesses as more technol-ogy innovations are made.

In order to stay in business andevolve, companies will need to look attheir different business units (origina-tions through servicing through loandisposition) as a whole instead of indi-vidual components or silos. This per-spective will enable them to betterdetermine how to use technology col-laboratively across those units. In fact,future technology will need to removethe barriers between these businessunits and eliminate the siloed mentali-ty for the company to survive the bur-geoning regulatory climate.

Until recently, most companiesapproached the different silos of theirbusinesses with different technologysolutions. Origination, servicing (ordefault) and loan disposition all operat-ed separately with their own technolo-gy. Experts in each area, such as defaultspecialists, servicing specialists and dis-position specialists, used technology toenhance their individual capabilitywithout considering the ramificationson the whole process. Unfortunately,when using disparate systems created adata integrity challenge that made it

impossible to locate missing docu-ments. Those days are now long gone.

Historically, it was not important toa servicer who originated the loans and

conversely originatorsdid not think about whathappened after the loanclosed. Why? Becausethere was little if anyloan review. For example,when a servicer receiveda loan, they were notconcerned with who veri-fied employment for theborrower and could nottell who had done so.Now, with regulatory andaudit requirements, ser-vicers must retain allorigination documenta-tion to properly servicethe loan. Additionally,the call for a single pointof contact (SPOC) requiresthis individual to possessdetailed information andin depth knowledge

about the loan and the borrower,rather than having expertise in a singlespecific area.

The growing need for transparencyat every step of the loan process—fromoriginations to disposition or default—makes it imperative for technology tofit within all lines of business, createefficiencies and at the same time allowthe lender/servicer to remain compli-ant. Along with transparency, systemsneed to collect and archive loan infor-mation not only for servicing and dis-position purposes, but for quality con-trol and auditing as well.

Companies should use the followingprocess to ensure its technology drivesthe company toward success in tomor-row’s business climate:

� Assess: Companies must evaluatetheir current systems and determinethe viability of their business in thenew regulatory environment.Companies may have to realize theycannot keep antiquated systems astheir system of record, as they willnot prove efficient or effective in thecurrent or future business climate.

“Reducing theorganization’s use ofthe sub-par systemwill prevent deeperentrenchment of the

technology and allowfor smoother

transition to a newsystem.”

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In other words, a company shouldnot expect a pig to fly (work withchanging regulatory requirements)just because the pig could jump(worked previously). These closed-end systems that try to monopolize aspecific area in the process will be acompany’s downfall.

� Determine: An honest look at whatthey need to meet the regulatoryrequirements while still creatingprocess efficiencies is paramount.Selecting technology that not onlypositions a company for futureefforts, but can operate effectively intoday’s market is critical.

� Contain: If a company determines itneeds to implement new technolo-gy, it should begin using the currentsystem only minimally in an effort tophase it out. Reducing the organiza-tion’s use of the sub-par system willprevent deeper entrenchment of thetechnology and allow for smoother

transition to a new system. � Reduce: After isolating and limiting

the use of old technology to a spe-cific department, companies canthen slowly start to do reduce its useand transition.

� Migrate: This will not happen overnight, but once the company beginsmaking the change, migrating willbe the step that allows new efficien-cies and the ability to remain rele-vant and compliant in an ever-changing market.

Companies may find that some sys-tems may need to be replaced whileothers work just fine. Using a gradualapproach is necessary and can be exe-cuted with the use of a technology plat-form that can compliment the existingsystems as well as operate with the newones. This system will give users theability to make an orderly transitionbetween systems as necessary while

providing the transparency and controlthey need. This method allows compa-nies to avoid disrupting day-to-dayprocesses and does not entail downtime while making the transition.

Future technology also needs toaccommodate mobile users who wantto easy system access from anywhereand at any time using one of the popu-lar tablet devices. Convenient technolo-gy that allows this to take place will bethe leaders in the mortgage industry.The use of mobile technology willrequire additional mental adjustmentson the part of the mortgage industryand will move the industry forward, ifallowed to do so.

There is not a silver bullet technolo-gy that will solve all the needs andrequirements of a mortgage company.A group of technologies that worktogether, have open architecture, cre-ate transparency and fill the gapsbetween business units seamlessly is

what the industry demands. Now, regu-latory entities such as the CFPB requireaudits that not only capture what wasdone regarding a loan but also who didit, when they did it and why, and tech-nology helps organizations retain thisinformation in one place. Instead ofhaving several disparate systems withdifferent pieces of information, morecollaborative systems will rise and com-panies that want to be successful willleverage them instead of holding on totheir old systems. Ultimately, youshould not wait for the pig to fly justbecause you saw it jump.

Sanjeev Dahiwadkar is president andCEO of IndiSoft LLC, a Columbia, Md.-based software development companyfor the default servicing industry. Hemanages the company’s overall strategicplanning and direction as well as over-sees its business operations. He may bereached by phone at (410) 730-0667.

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still standing continued from page 21

those changes stop us in our tracks. Weabide by all regulations and do not have aproblem with accepting and implement-ing them into our business model. We takethe time to understand them so we canclearly determine how we can and cannotproceed with building our business. Thekey is to be the best at executing within theregulatory framework that exists at a givenpoint in time.

Set a clear vision for the futureAs we look to the future, we knowwhere we want to go and how we planto get there. We are currently licensed in22 states and the District of Columbia,and have our heaviest presence in theNortheast, where we have done wellduring the last few years despite thefinancial crisis. The Southeast has beena little more challenging, but we areconfident we will begin to see growth inthat region as well. We will continue tobring on the very best talent in our

industry and teach them the high quali-ty standards that we have set for ourorganization. We will continue to putquality before quantity, and focus onthe core fundamentals that have gottenus to this point, despite a perfect stormthese past few years.

I am proud of our accomplishmentsand am thankful for the lessons we havelearned. Our industry faced what wereinsurmountable challenges for many, butwe stayed our course and it has allowed usto become who we are today. MortgageMaster is an exceptional team of greatleaders and innovators, focused on thefundamentals necessary to becoming oneof the best financial service companies inthe country.

Paul Anastos is president of Walpole,Mass.-based Mortgage Master, a super-regional mortgage banker and one of thecountry’s largest privately-owned mort-gage companies. He may be reached byphone at (508) 850-4100.

new to market continued from page 38

that enables side by side comparison ofdocuments in the same window withdrag and drop functionality; enhancedcontrols to manage document stacking;and significant upgrades and flexibilityto the bundling and delivery engine.

“As always, the enhancements andfeatures included in this release hingeon delivering what lenders need tomaximize efficiency in today’s market”,said Steve DeBlasio, national salesmanager for Axacore Inc.

In addition to the new features,Axacore has made significant changesand updates to its underlying technolo-gies that build on the existing high per-formance, scalability and reliabilitythat the Axacore platform is known for.

“We understand that mortgagelenders all operate differently, howeverthe common denominator alwaysincludes reducing expenses, time and

staying in compliance,” said DeBlasio.“Our goal was to deliver the enhance-ments that our customers need whilemaintaining the sought after flexibilityof our platform. This allows Lenders toconduct business their way and our goalhas definitely been reached with thisversion.

New Equifax Product Takes Aim at Loan Quality Production

Equifax hasannounced

the availability of its SpectrumVerification Services Platform, whichstrengthens lender confidence bystreamlining the verification processesthrough underwriting, quality assur-ance and closing. Equifax developedSpectrum to help lenders gain efficien-cies and improve overall loan quality

production, which helps mitigate loanrepurchase risk. Fully automated,Spectrum rapidly delivers loan-level ver-ifications by combining unique dataassets with integrated workflowprocesses to reduce fraud, improveoverall loan quality and cycle times,avoid capacity issues, and reduce costs.Spectrum also provides real-time accesswith intuitive ordering and trackingscreens to efficiently deliver the mostcurrent and accurate data.

Verification services currently offeredthrough Spectrum include: employ-ment and payroll income via The WorkNumber—Equifax’s proprietary data-base of 210 million-plus employer-direct payroll records, IRS tax transcripts(4056-T), identity and social securitynumber authentication, verification ofdeposits, and verification of hazardinsurance coverage.

Spectrum enables the lender to ordera full array of verification reportsthrough a single, intuitive Web inter-face, or through direct system integra-tion. A system-driven workflow assem-bles the verifications using both data-base content and information collectedand audited manually by trained verifi-cation specialists. For several clients,Spectrum has demonstrated clear effi-

ciency gains and cost savings over in-house processing.

Additionally, Spectrum featuresUndisclosed Debt Monitoring (UDM),which is the mortgage industry’s onlyservice that continuously monitors anddistributes daily alerts of new loanapplicant activity initiated during thepre-funding stage of a loan. UDMreduces risk and protects lenders fromrepurchase demands and unsalableloans related to inaccurately reporteddebt-to-income ratios.

Your turnNational Mortgage ProfessionalMagazine invites you to submit anyinformation promoting new “niche”loan programs, new products or anyother announcement related to theintroduction of a new program, to theattention of:

New to Market columnPhone #: (516) 409-5555

E-mail:[email protected]

Note: Submissions sent via e-mail arepreferred. The deadline for submissionsis the 1st of the month prior to the tar-get issue.

nmp news flash continued from page 19

“Research shows that upwards of 65percent of complex software implementa-tions result in failure,” said David Colwell,vice president of corporate strategy atLendingQB. “Even for implementationsthat do succeed, more than a third of theseprojects go over budget. The goal of theEPA is to help lenders avoid being one ofthese statistics and achieve an optimal ROIthat effectively addresses the technologygoals they have in mind.”

LendingQB unveiled their EPA modelearlier this year, and conducted a series ofWebinars over the summer to help lendersobjectively evaluate mortgage technologies.The EPA model engages lenders through in-depth interviews with lending executivesand management, and is followed bydetailed mapping of a lender’s uniqueworkflow, which then provides a frameworkfor LendingQB to construct a custom surveythat gathers productivity assessments fromthe lender’s staff. A statistical analysis is thenapplied to identify key improvements andcorrelate data along with recommendedtechnology objectives and a clear path for-ward roadmap.

EPA findings show that:� Lenders tend to focus on surface-level

features instead of addressing solutionsto underlying problems.

� There are typically five major produc-tivity bottlenecks that lenders try toaddress with new technology.

� Prioritization of features is determinedusing subjective methods instead ofrelying on objective or empirical datasuch as productivity improvement.

� Stakeholder input is typically gatheredtop-down versus bottom-up.

� Vendor evaluations focus primarily onsystem functionality and give lessweight to system utilization.The EPA provides lenders with a bal-

anced and objective perspective on a ven-dor’s complete technology stack anduncovers issues that are not readily appar-ent to management.

“Even large organizations that can pro-duce detailed RFPs are not immune towhat I term ‘feature enamored syndrome,’or poor weighting of technologydemands,” said Colwell. “We designed theEPA to be as an aid to existing evaluationmethods. As a company that has success-fully implemented systems for hundreds offinancial institutions, our value to lendersis more than the systems we build. Wewant to contribute to a lender’s success,whether they use our technology or not.”

Your turnNational Mortgage Professional Magazineinvites you to submit any information onregulatory changes, legislative updates,human interest stories or any other news-worthy items pertaining to the mortgageindustry to the attention of:

NMP News Flash columnPhone #: (516) 409-5555

E-mail: [email protected]

Note: Submissions sent via e-mail are pre-ferred. The deadline for submissions is the1st of the month prior to the target issue.

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HomeBridge is a national wholesale lender offering both conventional and

government products. We are committed to providing the highest value to our

clients through competitive pricing, unique product offerings, superior

customer service, and state-of-the-art technology. The leadership team is

committed to promoting a standard of excellence, responsible lending, and

acknowledging there is a borrower at the end of each transaction. Our

professional sales and operations staff is dedicated to providing its clients with

exceptional levels of service and customer support.

To learn more about the HomeBridge advantage, please contact us at 855-729-2885.

www.homebridgewholesale.com

This information is provided for the use of mortgage professionals only and is not intended for distribution to consumers or

other third parties. Product information is subject to change without notice. HomeBridge is a division of Real Estate Mortgage

Network, Inc. NMLS #6521. HomeBridge is licensed or operating with a license exemption under the name Real Estate

Mortgage Network, Inc. d/b/a HomeBridge except in the following states; AK, IL, MD, MN, NY, RI, VA “Real Estate Mortgage

Network, Inc.”; VT: “Real Estate Mortgage Network, Inc. d/b/a HomeBridge Funding” © Real Estate Mortgage Network, Inc.

d/b/a HomeBridge. All rights reserved.

Appraisal Management Company

Branch Manager

StreetLinks Lender Solutions provides an innovative andcomprehensive suite of valuation and service solutions used bylenders, servicers and appraisers nationwide to improve everydaybusiness operations.

StreetLinks industry-leading products include LenderPlus™ full-service appraisal management, LenderX™ lender-executedappraisal management software and SCORe™ appraisalreviews and a series of valuation analysis tools for services.Our commitment to quality and service, embodied by ourpartnership approach to clients and appraisers, continues toset us apart as the nation’s premier lending solutions partner.For more information, visit www.streetlinks.com.

StreetLinks Lender Solutions(800) 778-4920

[email protected]

Coaching

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Bonds & Licensing

Finally - the freedom to originate!America's Choice gives you the tools you need so you can Originate,Close and Get Paid!

We work as hard as you to be America’s Choice for consumersneeding a home loan, and we work just as hard to be America’sChoice for top branch managers, loan originators and mortgageprofessionals.

Call Jonathan Fowler, Director of National Production at 713-821-9750to learn how you can have a better, more rewarding career.

America’s Choice Home Loanswww.achlonline.com

713-821-9750

Accounting and Audit

A full service CPA firm specializing in the needs of the mortgageindustry. Providing monthly bookkeeping services,FHA andfinancial statement audits , corporate tax preparation and con-tract CFO services. Contact us today to learn more.

Mark Wilson Certified Public Accountants9455 Ridgehaven Ct, Suite 101 • San Diego, CA 92123

619-649-0712www.markwilsoncpa.com

Meadowbrook loan originators make 33% more money withMeadowbrook than with any other company they worked for.Enjoy the benefits of a low compare ratio, a lead management sys-tem with an endless supply of leads, A tier investors, and muchmore.

Meadowbrook is hiring Branch Managers and Loan Originators.We are licensed in NY, CT, PA, NJ, MD, FL, MA, NC, pending inSC, NH, and RI.

Meadowbrook is an FHA, Fannie Mae, Freddie Mac, and VAendorsed lender.

Meadowbrook Financial Mortgage Bankers1-888-MEADOW8 (632-3698)www.mortgagesalesjob.com

Branch Recruitment

Immediate investment in your business. We pay licensing, initialmarketing, more. Next Day Pay™. Total support. Easy transition.Full suite in-house products. Mortgage banker & top-level broker28 states|20+ years|On Inc.500 list of fastest-growing companies

Guaranteed Home Mortgage Company, Inc.Headquarters: 108 Corporate Park Drive Ste. 301

White Plains, NY 10604(888) 329-GHMC | [email protected]

LOWEST-COST STATE MORTGAGE LICENSE BONDSSupport NAMB in supporting you!

Online surety bond applications, instant underwriting approval, andcredit card payments administered through The Bond Exchange -NAMB's exclusive partner provider for state license surety bonds.

The Bond Exchange is a national surety agency specializing in serv-icing mortgage license bonds for thousands of mortgage profession-als across the country.

Low prices and fantastic service. You really can have them both atthe same time!

The Bond Exchangewww.bondedwithnamb.org

(501) 224-8895

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Branch Manager

• Mortgage Branch Employment Opportunities

• We work with some of the top mortgage branch companies inthe industry!

• With hundreds of branch employment opportunities out there,making a choice on who to sign up with is not an easy task! Weare here to help!

• Hiring Licensed Mortgage Originators for branch managementand loan origination.

• Bank and Broker status to choose from, multi-State lending andmore...

Visit our site or call us today to speak to one of our representatives.

Mortgage Brokers Network Corp, Inc.1-888-589-7048

The Mortgage Industry’s Matchmakerhttp://mortgagebrokersnetwork

"WE HELP YOU GROW YOUR BRANCH AND SKYROCKETYOUR INCOME!"

• We fund your start-up costs• Corporate Recruiting Team that puts producers in your branch• Direct Connection with the branch managers who are crushing it• Proven "Marketing Maps" that will double your business• "Next Level Support" to help keep you growing• Get a BPS payback from our volume incentive, or build a margin

for yourself into your rate!• Full capability to control your loan officers' pricing.• Create, Customize and Optimize your branch's compensation plan.• Full Eagle Lender and In-House Underwriting, Closing and

Fundings• Currently looking for high-quality producers in: TX, CO, NC, SC,

NJ, OH, GA, AL, TN, FL, MS, LA, KY

Hometown Lenders(888) 606-8066

[email protected]

Document Preparation

Document Preparation (SaaS)

Mortgage Loan Closing Document Preparation & Compliance ServicesFulfillment Services Including Pre-Funding Review & Post-ClosingInterfaces with Leading Loan Origination Software SystemsForeclosure – Loss Mitigation Services

Robertson | Anschutz800-343-7160

[email protected]/info.html

Mortgage Loan Closing Document Preparation & Compliance SoftwareLoan Documents and Compliance – Web-based/SaaS – Easy to UseIntuitive – Secure and Reliable – Integrates with Leading LOSFree Setup and Support – Extensive Compliance Audits

Docs on Demand800-343-7160

[email protected]

Call 516-409-5555, ext 4, to register your company.

Credit Reporting

Credit reports • Rapid rescore • Reissue • SupplementsIRS & Social verification • VOE / VOI • Title • Flood

Appraisals / BPO / AVM • Fraud alerts • Red Flag • LQIMOST AGGRESSIVE PRICING!

“A Full Service Lending Information Company”A/E: Jeremy “Judge” Honor

877-MFI- [email protected]

www.MfiCreditSolutions.com

Continuing Education

NMLS approved 20 hour Prelicensing EducationNMLS approved Continuing EducationLive Classroom Instruction, Web Delivery and Private EventsThe SAFE-Smart ExamCram, Powerfully Innovative Test Prep

Abacus Mortgage Training and EducationPO Box 780

Summerfield, NC 27358888-341-7767 • www.GetYourEd.com

Bookmark this!Access these listings

online atnmpmag.com/directory_list

Direct Mail

TagQuest is a full service marketing firm created specifically forthe ever changing mortgage business. We have tested and provencampaigns for FHA -VA - HARP - CONVENTIONAL loan types.TagQuest knows what it takes to generate quality leads whetherthrough direct mail marketing, telemarketing, internet leads, datalists, tracking systems, or any combination thereof. TagQuest willbrand your company, prepare targeted marketing campaigns thatgenerate interest in your company, and most importantly, showyou how to turn sales leads into repeat customers.

TagQuestwww.myharpleads.com

TagQuest.com888-717-8980

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 GROUP167 West Hudson Street - Suite 200

Long Beach | NY | 11561 | (516) 442-3456www.LendersComplianceGroup.com

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Compliance Consultants

Division of Lenders Compliance Group, BCG is the first and onlymortgage risk management firm in the U.S. devoted to supporting

the unique compliance needs of residential mortgage brokers.

Leveling the Playing Field for Mortgage Brokers

Low Cost Monthly Membership Includes: • Free Weekly Hotline• Access to Subject Matter Experts• Policies and Procedures• Webinars

*Special Pricing*• Quality Control • Exam Readiness • Licensing • Legal Reviews

BROKERS COMPLIANCE GROUP167 West Hudson Street – Suite 200

Long Beach | NY | [email protected]

www.BrokersComplianceGroup.com

Continuing Education (Cont.)

Jeff Mifsud, a former FHA Direct Endorsed Underwriter trained byHUD and an FHA Originator for over 15 years, is publisher of TheFHA Originator, a monthly marketing newsletter which gives you…

• FHA guideline news to keep you updated• FHA Marketing tips and downloads that are easily customized• Personal development tips to help you develop your character• Full access to all previous FHA marketing downloads!

No contracts so sign up today and give yourself the tools to brandyourself as The FHA Expert in your marketplace.

Cost: Only $19.95 per month per physical office location.

Watch for our 8 Hour NMLS Continuing Education Course

Mortgage SeminarsMortgageSeminars.com

248-403-8181

Direct Mail (Cont’d)

Titan List and Mailing Services, Inc. is a direct marketing agencythat offers a complete range of advertising and design services.The firm specializes in data lists (mail/phone), printing, direct mail,graphic and website design as well as internet and SEO market-ing. Starting in 1998, the company has, since then employed high-ly skilled individuals who have considerable experience regardingmarketing trends. The company manages the complete in-housecampaign themselves including Design, Data Lists, Printing,Postage, and Mailing.

Titan List & Mailing Services, Inc.1020 NW 6th St Suite D, Deerfield Beach, FL. 33442

(800) 544-8060www.TitanLists.com

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Wholesale/Correspondent

HomeBridge5 Park Plaza, 10th Floor

Irvine, CA 92614www.homebridgewholesale.com

Valuation Services

Recruitment

Veros Real Estate Solutions is a premier technology leader in the mort-gage industry and proven leader in enterprise risk management andcollateral valuation services. Veros combines the power of predictivetechnology and data analytics for advanced automated solutions.

Veros Real Estate Solutions2333 North Broadway, Suite 350 • Santa Ana, CA 92706

(866) 458-3767www.veros.com • @verosres (Twitter)

Marketing Services

HomeBridge is a national wholesale lender offering bothconventional and government products. We are committed toproviding the highest value to our clients through competitivepricing, unique product offerings, superior customer service,and state-of-the-art technology.

8520 Macon Rd. Ste 2Cordova, TN 38018

[email protected] | 615-477-7118

Loan Origination Systems

Calyx Software, the #1 provider of mortgage solutions is dedicatedto offering reliable and affordable software that streamlines, inte-grates and optimizes the loan process. Find out how PointCentralcan streamline your business and create compliant processes today.

Calyx Software 800-362-2599

[email protected] www.calyxsoftware.com

Leads

TagQuest ................................................................888-817-8980CUSTOMIZE YOUR CAMPAIGNS! FHA - HARP - VA Leads,Loan Modification, Debt Consolidation, Direct Mail, Data List,Live Transfers, Internet Leads – tagquest.com

MCMF developed My Guide, a Premier Credit & FinancialEducation Magazine that you can customize with your LOGOand Ad Pages to feature your organization as well as provideyour borrowers a go-to-guide for credit and financial resources,empowering them to make the most informed financialdecisions.

This 16 page, full color, quarterly publication, provides financialliteracy tools in a concise, unbiased, easy to understand format.

My Guide is offered in traditional magazine print, as well as ournewest electronic flipbook version, bringing “flipping through amagazine” experience right to your desktop

Contact me today to learn more about this one of a kindopportunity!

Employment Services

The Resource Registry is a directory of lenders (wholesaler or retail that are recruiting),

affiliated services and resources that is seen bymore than 191,181 active Professionals.

Mortgage Professional Resource Registry

Call 516-409-5555, ext. 4to register your company.

Wholesale/FHA

Icon Residential Lenders(888) 247-4207

www.iconwholesale.com

Icon Residential, a wholly owned subsidiary of Grand Bank N.A.,is one of the nation’s leading Conforming, FHA and VAwholesale lenders. Our strength, success and longevity isderived from delivering customers service that exceeds ourvalued business partners expectations. With deep industryknowledge, financial stability and innovative technology weprovide the solutions for our business partners to fund loanswhile avoiding risk.

• Direct Access to Underwriters• Competitive Pricing• Innovative Technology• Paperless Solution• Bank Funding

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Wholesale/Residential

CBC National Bank is one of the nation’s fastest growingwholesale lenders offering Conventional, FHA, VA, and USDA.The most important aspect of being a leader in today’s market isthe ability to build and maintain a meaningful relationship witheach customer. We understand that these meaningful relation-ships coupled with competitive pricing and efficient technologyare the pillars of today’s lending environment.

We are hiring Loan officers in the Southeast. GA, FL, AL, TN,NC,SC.

Contact Gabe Santiago our Corporate Recruiter at

[email protected] for further details.

Big Enough to MATTER…Small Enough to CARE

CBC National Bank3010 Royal Boulevard South, Ste. 230

Alpharetta, GA 30022888-486-4304

Wholesale Lenders

REMN has FHA, USDA, 203k, VA and Conventional solutions to fitthe needs of your customers. But, at REMN, our most valuableproduct is our people. The REMN Sales and Operations Teamsgive you - and your loans - the time and attention that youdeserve. Even better, at REMN, same-day approvals are guaran-teed.* You can rely on us to get the little, yet vital, things takencare of on time.

Interested in joining our Wholesale Division? Send your resume to

[email protected]

Real Estate Mortgage Network, Inc.www.remnwholesale.com

866-933-6342

Wholesale Lenders (Cont’d.)

UWM has a full set of mortgage products to meet all of yourlending needs with Conventional, FHA, USDA (RuralDevelopment), VA, Jumbo, HARP 2.0 and DU Refi Plus. WithUWM’s ELITE program, you will receive the most aggressiveconventional rates and pricing in the industry for your eliteborrowers! Discover Lending Made Easy with United WholesaleMortgage!

United Wholesale Mortgage800-981-8898

www.uwm.com

DECEMBER 2012Friday-Monday, December 7-10

NAMB National 2012MGM Grand

799 South Las Vegas BoulevardLas Vegas, Nev.

For more information, call (972) 758-1151 or visit NAMB.org.

FEBRUARY 2013Sunday-Wednesday, February 3-6

2013 CREF/Multifamily HousingConvention & Expo

Manchester Grand Hyatt San Diego1 Market Place

San Diego, Calif.For more information,

call (800) 793-6222 or visitMortgageBankers.org.

Tuesday-Friday, February 19-22Mortgage Bankers Association (MBA)2013 National Mortgage Servicing

Conference & ExpoGaylord Texan Hotel& Convention Center1501 Gaylord TrailGrapevine, Texas

For more information, call (800) 793-6222 or visit

MortgageBankers.org.

Thursday-Saturday, February 21-23

Mortgage Bankers Association (MBA)National Short Sale

and REO Summit 2013Gaylord Texan Hotel & Convention Center1501 Gaylord TrailGrapevine, Texas



MARCH 2013Wednesday-Saturday, March 6-9

Mortgage Bankers Association (MBA)2013 Mid-Winter Housing

Finance ConferenceThe Ritz-Carlton Bachelor Gulch

130 Daybreak RidgeAvon, Colo.



Wednesday, March 13Florida Association of Mortgage

Professionals Broward Chapter 2013Annual Trade Show

“It’s Mardi Gras Time”Broward County Convention Center

1950 Eisenhower BoulevardFort Lauderdale, Fla.


www.browardfamp.org.

Wednesday, March 132013 Maryland Association of Mortgage Professionals

Annual ConferenceMaritime Institute

692 Maritime BoulevardLinthicum Heights, Md.For more information,

call (410) 752-6262 or visitwww.mdmtgpros.org.

APRIL 2013Sunday-Wednesday, April 14-17

2013 National Technology in MortgageBanking Conference & Expo

Westin Diplomat3555 South Ocean Drive

Hollywood, Fla.For more information,

call (800) 793-6222 or visitMortgageBankers.org.

Sunday-Wednesday, April 14-17Mortgage Bankers Association (MBA)

2013 National Fraud Issues ConferenceWestin Diplomat

3555 South Ocean DriveHollywood, Fla.



MAY 2013Sunday-Wednesday, May 5-8

Mortgage Bankers Association (MBA)2013 National Secondary Market

Conference & ExpoNew York Marriott Marquis

1535 BroadwayNew York, N.Y.



To submit your entry for inclusion in the National Mortgage Professional

Calendar of Events, please e-mail the details of your event, along with

contact information, to [email protected].

Sunday-Wednesday, May 19-22Mortgage Bankers Association (MBA)

2013 Commercial/Multifamily Servicing& Technology Conference

Arizona Biltmore2400 East Missouri Avenue

Phoenix, Ariz.For more information, call (800) 793-6222 or visit MortgageBankers.org.

Sunday-Wednesday, May 19-22Mortgage Bankers Association (MBA)

2013 Legal Issues/RegulatoryCompliance Conference

Boca Raton Hotel501 East Camino Real

Boca Raton, Fla.For more information, call (800) 793-6222 or visit MortgageBankers.org.

NATIONAL MORTGAGE PROFESSIONAL

calendarOF EVENTS

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Why I Love Being a Mortgage Broker

and Will Never Jump ShipBy Mike Anderson, CRMS

As one of the past leaders at NAMB—The Association ofMortgage Professionals who initiated the lawsuit againstthe Federal Reserve Board on loan originator (LO) com-pensation, it is hard to believe that I am actually sayingthat “I Love Being a Mortgage Broker!”

The year 2012 turned out to be one of the best yearsin my company’s 14-year history, with more than 85 per-

cent of our total production being purchase-based business. FHA account-ed for nearly 45 percent of the total volume and there is no doubt what-soever that the reason for our success was due to the fact that we are aMortgage Broker.

I know this is hard to believe but, the secret to our success this year isattributed to the LO comp rule. So far this year, we have issued more than$600,000 in lender credits toward borrower closing costs and pre-paidswhere our direct lender competitors are not issuing the credits. Our realestate agent partners are selling this to their clients on the benefits of usinga mortgage broker. We have actually received loans from a listing agentafter a direct lender has asked the seller to pay $5,000 to $7,000 in buyer’sclosing costs and after getting a quote from our company, we end up sav-ing the seller if not all, but a large portion of the amount requested result-ing in a lower price for the home. We have also set our compensation levelat one that allows us to issue large lender credits to our borrowers. We aremaking more money now than we have in many years by sheer word ofmouth. We get calls from friends, family members and co-workers of ourcustomers asking about the credits.

If you are a mortgage broker, be proud of what you have to offer andget the word out on lender credits, especially on government-backed loans.One cannot help but notice that the big banks are boasting record profitsthis year from loan originations and it’s no wonder when you see a 3.5 per-cent FHA loan paying 105.500.

So get the word out and let every real estate agent, builder, title com-pany, escrow company and the social media know what you have to offer.One tip is to set your compensation level at a price that is not to greedy andone that allows for you to offer credits in the first place.

Mike Anderson, CRMS, is president of Louisiana-based Essential Mortgage, ALatter & Blum Realtors Company. He may be reached by phone at (225) 297-7704 or e-mail [email protected].

Does your Direct Mail & Data vendor have both a clean track

record, and experience spanning over a decade?

This could mean the difference between your company’s success and failure.

www.TitanLists.com

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