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U.S. POSTAGEPAID
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PRESORTED STANDARD
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United Wholesale Mortgage® is a premier FHA lender with over 20years of FHA experience. Our network of brokers across the UnitedStates are closing more FHA loans every month with the speed, serv-ice and knowledge that UWM provides. We take great pride in offer-ing our brokers the best customer service in the industry. Ourdedication to excellence has helped us to become one of thefastest growing FHA lenders in the nation.
Gain more referrals on your purchases when you wow your Real-tors by getting them paid in 5-7 business days. At UWM, we closeyour FHA refinances before other loan officers have time to solicit yourclients. Every decision we make, every call we handle, and every loanwe close is designed to make you look good. Just as you wish tomake lifelong relationships with your customers, we have the sameobjectives with our Brokers.
SERVICE. SPEED. KNOWLEDGE.
• Close your FHA approve eligible loans in 5-7 business days
• 24-48 hour approve eligible underwrites• 24 hour streamline underwrites• 24 hour condition clearing• 24 hour closings• Direct access to your own underwriting team• Paperless submissions• Minimum 620 FICO score required• FREE DU at www.uwmco.com
Successful LO’s know the long term value of a fast closing.UWM Lends in 39 states:AL, AZ, AR, CO,CT, FL, GA, IA, ID, IL, IN, KS, KY, LA, MA,ME,MD,MI, MN, MO, MS, MT, NE, NH, NM, ND, NV, NC, OH, OK, OR, TN, TX,SC, UT, VA, WA, WI, WY
800.981.8898www.uwmco.com
UNITED WHOLESALE MORTGAGE
United Wholesale Mortgage is a 100% FHA Lender
WE ARE THE FHA SPECIALISTS
THE UWM STANDARD.
�� Visit www.uwmco.com to find your UWM Account Executive!
Congratulations to the following members of the LouisianaMortgage Lenders Association who have earned the LendingIntegrity Seal of Approval from the National Association of MortgageBrokers (as of 07/08/09). A mortgage professional can only make theLending Integrity pledge and display the Seal if he or she meets thefollowing criteria:
� Possess current state-issued mortgage broker license or has threeletters of reference, including one from an NAMB mortgage bro-ker (if a loan officer).
� Pass a federal criminal background check.� Complete eight hours of continuing education each year, includ-
ing three hours of ethics training or meet the state continuingeducation and ethics training requirements if higher. Equivalenthours over multiple years are accepted depending on individualstate multi-year licensing cycles.
� Pledge to adhere to the NAMB Code of Ethics, and ProfessionalStandards and Professional Standards and Best Lending Practices,and abide by the NAMB grievance review process.
Carol AdamsSal Bernadas, CRMS
Jaime CrochetDavid DeichmannCandice FarthingRhonda GallienDonald Gelpi
Pat GravesGail GregoireTodd Guidry
Bernard GusteTomas HeaneyRachel HibbsKevin Huskins
Belinda JaneckeRagan Kofoed
Ferdinand MarzialeLexa McDaniel
Linda MonistereDelores Murray
Gervy Papion, CRMSLayna Pavlu
Jennifer PrudhommeArtoun RamianLesley Ramian
Cheryl RayJeremy RichardMarlene Rouen
Rhonda RuoppoliRenie Schell
Anthony SerroBrandice Simpson
Stephanie St. BlancMary Thomas
Edward Timmons, CRMS, CMCDonna Waltrip
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Louisiana Mortgage Lenders Association2561 CitiPlace Court, Suite 750-177
Baton Rouge, LA 70808Phone #: (225) 231-8588 � Fax #: (225) 231-8501
Web site: www. lmla.com � E-mail: [email protected]
OFFICERS & GOVERNORSPhone # E-mail
Gervy Papion, MBA, CRMS President (337) 233-1316 [email protected] LeBlanc President-Elect (225) 766-1236 [email protected] Whitehead Vice President (225) 752-9711 [email protected] Delatte Secretary (337) 289-1303 [email protected] Bernadas, CRMS Treasurer (225) 791-5047 [email protected] Bernadas, CRMS Immediate Past President (225) 791-5047 [email protected]
Mike Airhart, CRMS Governor (225) 767-7275 [email protected] Allen Governor (225) 924-1900 [email protected] Anderson, CRMS Governor (225) 297-7704 [email protected] Balentine Governor (225) 292-2601 [email protected] Hodges Governor (225) 218-9746 [email protected] Huskins Governor (504) 818-0400 [email protected] LeBlanc Governor (225) 766-1236 [email protected] Miller Governor (504) 455-7002 [email protected] Roth Governor (337) 991-0816 [email protected] Sicard Governor (225) 754-5656 [email protected]
Shelley Graham Affiliate Member Representative (225) 978-3270 [email protected] Ray Affiliate Member Representative (504) 909-0068 [email protected]
Sal Bernadas, CRMS Delegate Council Member (225) 791-5047 [email protected] Papion Delegate Council Member (337) 233-1316 [email protected]
COMMITTEE CHAIRSCheryl Ray Convention Chair (504) 909-0068 [email protected] Degruise Membership Chair (504) 235-6260 [email protected]
Ashley Lee Association Coordinator (225) 791-5047 [email protected]
Mortgage PROFESSIONALL O U I S I A N A
M A G A Z I N E
Your source for the latest on originations, settlement, and servicing
LMLA’s Lending Integrity Seal of Approval
Recipients
2009 Editorial Calendar
Issue Focus Special Features
July 2009 Wholesale & Correspondent Who’s Left in Wholesale?Update
August 2009 Compliance Technology Compliance Tools Directory
September 2009 The Future of MortgageBanking
October 2009 It’s All About the Marketing! Lead Provider Roundup
November 2009 Growth Strategies for 2010 The 40 Under 40: The 40Most Influential MortgageProfessionals Under 40
December 2009 Building Relationships
*Please note that we also distribute as several other Mortgage Banker and Mortgage Broker events throughout the year
For advertising opportunities in these Focus Issues or Special Features, please call(888) 409-9770 and press "4" for the Advertising Department of
e-mail [email protected].
For more information on editorial contributions, please call (888) 409-9770 and press "6" for the Editorial Department or e-mail [email protected].
For more information, call NAMB at(703) 342-5900, e-mail [email protected]
or visit www.lendingintegrity.org.
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“Atare Agbamu is one of only a handful of people in the reverse mortgage arena
who possesses a commanding understanding of the reverse mortgage industry.
As an originator, he has hands-on experience educating seniors and their advisors.
As author of the “Forward on Reverse” column in The Mortgage Press since 2002,
Atare Agbamu communicates nationally with the housing finance community,
bringing the unique insights and experience of an ardent reverse mortgage expert
into a wider business context.
“This book combines Atare’s keen insights and know-how with extensive research to create a first
of its kind resource for the reverse mortgage industry. It offers a comprehensive overview of the indus-
try plus detailed information on marketing and originating reverse mortgages.
“Present and future reverse mortgage professionals and senior advisors will profit from
decades of experience skillfully woven into this book. If you plan to succeed in this industry, this
book is the place to start.”—Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLA’s Boardof Directors
“When I first began reviewing the contents of this book, I became quite jealous ... Atare Agbamu
has set down an impressive amount of information ... And he delivers it in an easy-to-read, simple-
to-understand style that will make this book essential reading for all reverse mortgage
professionals.”—from the Foreword by Jim Mahoney, Co-Founder and Former Chairman, Financial Freedom Senior FundingCorporation, and former four-term Co-Chair of NRMLA’s Board of Directors
“The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and
acceptance of reverse mortgages among us laypeople. They are very compelling ...”—Therese Cain, Executive Director, Minneapolis/St. Paul Chapter of Little Brothers—Friends of the Elderly
“This book should be required reading for all new loan consultants originating reverse mortgages and
is recommended for experienced ones as well. This book provides excellent insight and information
on preparing ahead to provide the service our seniors deserve, to ensure a smooth loan process and
shorten the time to closing. Most of the problems caused in the processing and closing of reverse
mortgages come from inadequate preparation.”—Deanne Opstad, AVP, Senior Underwriter, Generation Mortgage Company
Think Reverse!Table of Contents
Part I:
The new pillar of retirement security
Part II:
Marketing reverse mortgages: It’s all about education
Part III:
Originating reverse mortgages
Part IV:
Enhancing freedom: The essence of reverse mortgages
Part V:
A new frontier in mortgage lending
Only
$49.95
Plus Postage
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NMP EXPLORER
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The NAMB Perspective
FTC Enforcement of Red Flags Rule Begins Aug. 1, 2009 By Terry W. Clemans
Value Nation: How Strong is the FHA Loan? By Charlie W. Elliott Jr., MAI, SRA
Forward on Reverse: An Assault on Fairness: QuashMortgagee Letter 2008-38, Part I By Atare E. Agbamu, CRMS
Nationwide Mortgage Licensing System: Who, What,Where, When, Why? By Linda Moore MacCoy
Ask Brian: What Station Are You Tuned Into? By Brian Sacks
NMP Mortgage Professional of the Month: Mat Ishbia,National Sales Manager, United Wholesale Mortgage
Regulatory Compliance Outlook: July 2009 By Jonathan Foxx
Living With HVCC: The Industry Weighs in on the effects ofthe Home Valuation Code of Conduct By Eric C. Peck
Saving the Yield Spread Premium By Jonathan Foxx
FHA Insider: Need Clarity on FHA’s Allowance of First-TimeHomebuyer Tax Credit By Jeff Mifsud
Questions About the Future of Wholesale Are Growing By David Lykken
Shutting Out Mortgage Brokers … be Careful What YouWish for! By Joe Adamaitis
The Future of Mortgage Brokers: Back to square one By Gilbert Frank
Ask Tommy: Your QC Expert By Tommy A. Duncan
Who’s Left in Wholesale Directory (Commercial &Residential)
Recruiting From the “Compatibility” Approach … the LostArt By David Walden
Trend Spotter: Real Estate Investors: “Where’s MyBailout?” By Gibran Nicholas
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July 2009Volume 1 • Number 3
1220 Wantagh Avenue • Wantagh, NY 11793-2202Phone: (516) 409-5555 / (888) 409-9770
Fax: (516) 409-4600Web site: www.nationalmortgageprofessional.com
Mortgage PROFESSIONALN A T I O N A L
M A G A Z I N E
Your source for the latest on originations, settlement, and servicing
STAFFEric C. Peck
Editor-in-Chief(516) 409-5555, ext. 312
Andrew T. BermanExecutive Vice President(516) 409-5555, ext. 333
Domenica TrafficandaArt Director
Karen KrizmanSenior National Account Executive
(516) 409-5555, ext. [email protected]
Beatrice MarcusOffice Manager
(516) 409-5555, ext. [email protected]
ADVERTISINGTo receive any information regarding advertising rates,deadlines and requirements, please contact SeniorNational Account Executive Karen Krizman at (516) 409-5555, ext. 326 or e-mail [email protected].
ARTICLE SUBMISSIONS/PRESS RELEASESTo submit any material, including articles and pressreleases, please contact Editor-in-Chief Eric C. Peck at(516) 409-5555, ext. 312 or e-mail [email protected]. The deadline for submissions is the first of themonth prior to the target issue.
SUBSCRIPTIONSTo receive subscription information, please contactOffice Manager Beatrice Marcus at (516) 409-5555, ext.301, e-mail [email protected] or visitwww.nationalmortgageprofessionalmagazine.com. Anysubscription changes may be made to the attention ofBeatrice Marcus via fax to (516) 409-4600 or [email protected].
Statements of fact and opinion in National MortgageProfessional Magazine are the responsibility of theauthors alone and do not imply an opinion on the part ofNMP Media Corp. National Mortgage ProfessionalMagazine reserves the right to edit, reject and/or post-pone the publication of any articles, information or data.
National Mortgage Professional Magazine is published monthly by NMP Media Corp.
Copyright © 2009 NMP Media Corp.
NATI
ONAL
MORTGAGE PROFESSIONAL
MAGAZINE
NMPNMP
A message from NMP Media Corp. Executive Vice President Andrew T. Berman
The “Month of the Mortgage Broker”This month, we have dedicated a great deal of attention to the mortgage broker andthe state of the wholesale marketplace. This includes our feature story, “Living WithHVCC,” compiled by our own Editor-in-Chief Eric C. Peck, featuring feedback on theHome Valuation Code of Conduct (HVCC) from mortgage brokers, wholesalers and anappraisal management company (AMC). There is a great article by compliance expertJonathan Foxx on “Saving the Yield Spread Premium.” You will also find articles in thespecial focus on “The State of the Wholesale Marketplace” from David Lykken address-ing the questions on everyone’s mind about the future of the wholesale market, a warn-
ing to the industry about what would happen without mortgage brokers by Joe Adamaltis, and a piece byGilbert Frank where he talks with brokers who are making it work even in today’s challenging environ-ment. To help stay on topic, this month, we choose Mat Ishbia, national sales manager for UnitedWholesale Mortgage, as our NMP Professional of the Month. Also, be sure to check out the list of residen-tial and commercial wholesalers out there who are ready for mortgage brokers to send them deals!
What happens in Vegas, stays with you while you build your businessin 2010! While on the topic of mortgage brokers, I have to let you know about the National Association of MortgageBrokers (NAMB) annual event, NAMB/WEST, set for Sunday-Tuesday, Dec. 6-8 at the MGM Grand Hotel in LasVegas. Stay tuned to the pages of National Mortgage Professional Magazine or visit www.namb.org as NAMBlines up guest speakers, plans education sessions, posts its list of exhibitors (including the newest wholesalers),and plans tons of networking opportunities at this exciting event that will surely close out 2009 in style!
National Credit Reporting Association gets a voice in NationalMortgage Professional Magazine We are pleased to announce that, in addition to being the official magazine of NAMB and the NationalAssociation of Professional Mortgage Women (NAPMW), we are now also the official magazine of theNational Credit Reporting Association (NCRA). In this issue, NCRA Executive Director Terry W. Clemans talksabout the Federal Trade Commission’s enforcement of the Red Flags Rules. Stay tuned to future issues formonthly updates on the state of the credit reporting industry from Terry and his team.
A view of the regulatory landscape Due to reader request, we were able to get regulatory compliance expert Jonathan Foxx to author a monthlycolumn titled, “Regulatory Compliance Outlook.” This month, Jonathan covers the Mortgage DisclosureImprovement Act, HVCC, and the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). For moreon the SAFE Act, be sure to read the interview with Berri Leslie from the State of Oregon Department of Financeand Corporate Securities on Nationwide Mortgage Licensing System, conducted by Linda Moore MacCoy.Tommy Duncan also address some regulatory issues in his monthly “Ask Tommy: Your QC Expert” feature.
New business sources If you are looking for ways to reach new sources of business, be sure to check out “Ask Brian” by market-ing expert Brian Sacks, where he provides guidance on how to approach certified public accountants (CPAs)for business and working relationships, or this month’s “Trend Spotter” column by Gibran Nicholas whereGibran shares his ideas on how to attract business from real estate investors.
Other “must reads” Since government-insured programs (FHA and VA loans) marketshare of mortgage applications has risen to35.9 percent in June 2009 (the highest level since November of 1990, according to the Mortgage BankersAssociation), it’s no wonder why our readers have been asking for more FHA-related content. This month’s“Value Nation” column by Charlie W. Elliott takes a look at the strength of the FHA program; this month’sinstallment of “Forward on Reverse” by Atare E. Agbamu addresses the very controversial topic of non-recourse to seniors and their heirs left open by FHA Mortgagee Letter 2008-38; and this month’s “FHA Insider”column by Jeff Mifsud exposes some methods to help clarify FHA’s allowance of first-time homebuyer taxcredits. If you are responsible for hiring for your organization, be sure to read David Walden’s piece on howcompanies are forgetting about one of the most important areas of recruiting, “compatibility.”
I hope you enjoy yet another informative and topical issue of National Mortgage Professional Magazine, anddon’t forget to get your daily dose of the latest industry news online at www.nationalmortgageprofessional.com,your online home for breaking mortgage industry news and informative articles from industry experts.
Andrew T. Berman, Executive Vice PresidentNMP Media Corp.
National Credit Reporting Association Inc.125 East Lake Street, Suite 200 � Bloomingdale, IL 60108
Phone: (630) 539-1525 � Fax: (630) 539-1526Web site: www.ncrainc.org
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The National Association of Mortgage Brokers
7900 Westpark Drive, Suite T-309 � McLean, VA 22102Phone: (703) 342-5900 � Fax: (703) 342-5905
Web site: www.namb.org
President—Jim Pair, CMCMortgage Associates Corpus Christi6262 Weber Road, Suite 208 � Corpus Christi, TX 78413(361) 853-9987 � [email protected]
President-Elect—William Howe, CMC, CRMSHowe Mortgage Corporation9414 E. San Salvador Drive, #236 � Scottsdale, AZ 85258(602) 200-8100 � [email protected]
Vice President—Michael D’Alonzo, CMCCreative Mortgage Group1126 Horsham Road, Suite D � Maple Glen, PA 19002(215) 657-9600 � [email protected]
Secretary—Penny Fagan, CRMSP. Fagan Mortgage Inc.222 East Moulton Street � Decatur, AL 35601(256) 355-5505 � [email protected]
Treasurer—Don Frommeyer, CRMSAmtrust Mortgage Funding Inc.200 Medical Drive, Suite D � Carmel, IN 46032(317) 575-4355 � [email protected]
Immediate Past President—Marc S. Savitt, CRMSThe Mortgage Center115 Aikens Center, Suite 20-B � Martinsburg, WV25401(304) 267-9040 � [email protected]
Joe CamarenaThe Mortgage Source10120 Southwest Nimbus Avenue, Suite C-7 � Portland, OR 97223(503) 443-1060 � [email protected]
Donald E. Fader, CRMSSMC Home FinanceP.O. Box 1376 � Kinston, NC 28503-1376(252) 523-5800 � [email protected]
Ginny Ferguson, CMCHeritage Valley Mortgage Inc.5700 Stoneridge Mall Road, Suite 150 � Pleasanton, CA 94588(925) 469-0100 � [email protected]
Denise LeonardMassachusetts Mortgage Association92 High Street, Unit T-41C � Medford, MA 02155(781) 393-9400 � [email protected]
Walt ScottExcalibur Financial Inc.175 Strafford Avenue, Suite 1 � Wayne, Pa. 19087(215) 669-3273 � [email protected]
Don StarksD.C. Starks Mortgage Associates Inc.141 South Main Street � Bourbonnais, IL 60914(815) 935-0710 � [email protected]
President—Judy Ryan(800) 929-3400, ext. [email protected]
Vice President—Marty Flynn(925) 831-3520, ext. [email protected]
Treasurer—Daphne Large(901) [email protected]
Ex-Officio—Nancy Fedich(908) 813-8555, ext. [email protected]
Director—Thomas Conwell(248) [email protected]
Director—Don Goldammer(661) [email protected]
Director—Sanford (Sandy) Lubin(805) [email protected]
Director—Dave Miller(317) [email protected]
Director—Donald J. Unger(303) 670-7993, ext. [email protected]
Director—Tom Swider(856) 787-9005, ext. [email protected]
Director—Donovan Williams(714) [email protected]
NCRA StaffExecutive Director—Terry Clemans(630) [email protected]
Office Manager/MembershipServices—Jan Gerber(630) [email protected]
Legal Counsel—James Sutton(972) [email protected]
PresidentLiz Roberts-Fajardo, GML(702) [email protected]
President-ElectGary Tumbiolo, CMI(919) [email protected]
Senior Vice PresidentSharon Patrick, MML, CMI(386) [email protected]
Vice President/Northwestern RegionJill M. Kinsman(206) [email protected]
Vice President/Western RegionTim Courtney(760) [email protected]
Vice President/Central RegionCandace Smith, CMI(512) [email protected]
Vice President/Greater NortheastRegionColleen-Therese McKeever, CMI(646) [email protected]
Vice President/Southeastern RegionJessica Edmonston(919) [email protected]
SecretaryLaurie Abisher, GML, CMI(661) [email protected]
TreasurerKay Talley, MML(919) [email protected]
ParliamentarianHulene Bridgman-Works(972) [email protected]
NAMB Board of Directors
National Association of ProfessionalMortgage Women
P.O. Box 140218 � Irving, TX 75014-0218Phone: (800) 827-3034 � Fax: (469) 524-5121
Web site: www.napmw.org
Officers
Directors
Board of Directors
National Board of Directors
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A Message From NAMB 2009-2010 President Jim Pair, CMC
I’m just like youAs new president of the National Association of Mortgage Brokers (NAMB), I wantto thank you, the membership, for this opportunity to serve you. I may be thenew president, but in reality, I am just like you, a mortgage broker who is a proudmember of this organization, a person who believes our profession is an honor-able one that helps the American dream come true for thousands of our neigh-bors every year. The true strength, heart and soul of NAMB is you, the members.You are on the front line everyday, conducting yourself according to the Code ofEthics and Best Business Practices of our industry. I am very proud of each andevery one of you.
We’re all in this together!Let us all remember the old saying that a chain is only as strong as its weak-est link. We are all in this together. Let us remember that reality as we gothrough this year, a year where we will rebuild our association into a forcethat helps rebuild our nation.
Challenges and opportunitiesIt is no exaggeration to say, in this coming year, our industry and organization willbe confronted with some daunting challenges. The bad news is that the economicdownturn has severely decreased our membership ranks. The good news is that wehave a tremendous opportunity to grow our membership because of legislationpassed last year that requires licensing of all originators and the approval of ournew Corporate Membership Category. This growth will help re-establish our orga-nization’s and industry’s position and importance to our economy and will helprebuild the association’s financial picture. In the past, we have always relied onIndustry Partners as financial partners. This year, we must reach outside of ourindustry for companies to become sponsors and partners with us to help inrebuilding our financial position.
Becoming better at what we doLike you, I strive every day to become better at my profession. That is why Iam particularly pleased about the new education requirements and our newrelationship with AllRegs. This relationship gives us the opportunity to offereducational classes to new licensees, thereby allowing us to share in theincome with AllRegs through NAMB Enterprises and the opportunity to recruitnew members.
Communication is a two-way streetAs you can imagine, Washington, D.C. is a continuous whirlwind of activity. One ofthe most important services NAMB provides its members should be in keeping theminformed of what is going on in our nation’s capital as it pertains to our industry. Weare ramping up our efforts to communicate better and more often with the member-ship, but we cannot be successful if we do not hear from you. Your input is vital tothe future of this organization, so please let us know what is on your mind.
Your role is criticalNext month, we will visit with you about your crucial role in helping us protect theinterests of our industry and those of the consumer. Rest assured, our efforts inWashington, D.C. on your behalf will continue to be constant and forceful.
Help our staff help youToday, our staff, ably led by Roy DeLoach, is smaller yet still as dedicated as everto serving you. They are working hard every day to protect and further your inter-
ests. So, when you communicate with them, please express your appreciation fortheir hard work. The environment in which they work is not an easy one so let usdo what we can to help them.
I thank you again for giving the chance to be your president. I will do my verybest to deserve your trust.
Jim Pair, CMC, 2009-2010 PresidentNational Association of Mortgage Brokers
NAMB Announces 2009-2010 Board of Directors
NAMB’s 2009-2010 board of directors takes the oath of office at the 2009 Mid-Year Meeting in San Antonio: (top row, from left to right) Treasurer Donald J.Frommeyer; Immediate Past President Marc Savitt; Past President GeorgeHanzimanolis (at podium); President-Elect William Howe; Vice PresidentMichael D’Alonzo and President Jim Pair with (bottom row, from left to right):Secretary Penny Fagan; and Directors Walt Scott, Ginny Ferguson, JoeCamarena, Don Fader, Denise Leonard and Don Starks
The National Association of Mortgage Brokers (NAMB) has announced its board ofdirectors for 2009-2010 at the association’s 2009 Mid-Year Meeting, held June 27in San Antonio, Texas.
Congratulations to the following:
NAMB 2009-2010 Officers� President (one-year term): Jim Pair, CMC, Corpus Christi, Texas� President-Elect (one-year term): William Howe, CMC, CRMS, Scottsdale, Ariz.� Vice President (one-year term): Michael D’Alonzo, CMC, Willow Grove, Pa.� Secretary (one-year term): Penny Fagan, CRMS, Decatur, Ala. (returning board
member)� Treasurer (one-year term): Donald J. Frommeyer, CRMS, Carmel, Ind.� Immediate Past President (one-year term): Marc Savitt, CRMS, Martinsburg, W. Va.
NAMB 2009-2010 Directors� Joe Camarena, Portland, Ore. (returning board member)
For more information on the National Association of Mortgage Brokers, visit www.namb.org.
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NAMB 2009-2010 Directors (continued)� Don Fader, CRMS, Kinston, N.C. (returning board member)� Ginny Ferguson, CMC, Pleasanton, Calif. (three-year term)
� Denise Leonard, Wakefield, Mass. (returning board member)� Don Starks, Bourbonnais, Ill. (returning board member)
A Message From NAMBTreasurer Donald J. Frommeyer
So, what do you want for the 2009 holiday season?Sure, we are in the midst of the hot and humid days of summer, but in theblink of an eye, the trees will begin to shed their leaves, and you’ll be swap-ping those shorts for pants and t-shirts for sweaters as the end of another yearwill be upon us.
The National Association of Mortgage Brokers (NAMB) has planned an excit-ing event to close out 2009, and all eyes will be on Las Vegas as the broker com-munity will come together at the MGM Grand Hotel, Saturday-Tuesday, Dec. 5-8 for NAMB/WEST.
Not sure what you want this year for the holidays? Why not ask for a ticket toNAMB/WEST. With the industry’s top lenders and wholesalers, speakers and edu-cational sessions under one roof, why not ask for the gift that is actually an invest-ment in your future?
While the schedule of events is still taking shape, I can provide you with a briefoutline to help you make your travel arrangements early:
Saturday, December 5 ..........................................NAMB/WEST Opening Reception
Sunday, December 6 ......................Speakers, Education and Committee Meetings
Monday, December 7 ........Speakers in the Morning/Exhibit Hall in the Afternoon
Tuesday, December 8 ....................NAMB Board Meeting in the Morning/Delegate Council Meeting in the Afternoon
Again, this is just a sampling of what we will have to offer at NAMB/WEST. Weare currently lining up top industry speakers and have some surprises in store aswe approach December.
The industry has clearly evolved over the past year, and I anticipate morechanges on the horizon. Why not stay ahead of the curve by joining your indus-try peers in Vegas for a few days of networking, education and fun atNAMB/WEST. You won’t be disappointed and will surely walk away from theevent with a wealth of knowledge and business contacts to close out 2009 on ahigh note, and begin a new year with a new perspective on the industry. Themortgage lenders and affiliates on hand will be showcasing the products andtools you need in order to improve your bottom line and get a nice jump-starton business in 2010.
So again, mark your calendars for Saturday-Tuesday, Dec. 5-8 at the MGM GrandHotel in Las Vegas for NAMB/WEST. Information will be made available in the com-ing weeks and months as the schedule is finalized by visiting www.namb.org orcalling NAMB headquarters at (703) 342-5900.
See you in Vegas!
Donald J. Frommeyer, CRMS, TreasurerNational Association of Mortgage Brokers
Scenes From the NAMB 2009Mid-Year Meeting
June 27 at the Watermark Hotel on the Riverwalk in San Antonio, Texas
The passing of the gavel takes place at the NAMB Mid-YearMeeting, as Immediate Past President Marc Savitt congratulatesJim Pair as he assumes the office of NAMB 2009-2010 president
NAMB Immediate PastPresident Marc Savittcongratulates JohnCouncilman on beingnamed NAMB Brokerof the Year
NAMB Immediate PastPresident Marc Savitt
is thanked for his termas association presi-
dent by Past PresidentGeorge Hanzimanolis
Gary Akright accepts theNAMB DistinguishedIndustry Service Awardfrom President Jim Pair
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For more information, contact Aubrey Eyer of NAMB [email protected] or visit www.namb.org for exhibitor details.
Preliminary schedule of eventsSaturday, December 5..............................................................................NAMB/WEST Opening Reception
Sunday, December 6 ..........................................................Speakers, Education and Committee Meetings
Monday, December 7 ................................................Speakers in the Morning/Exhibit Hall in the Afternoon
Tuesday, December 8 ......NAMB Board Meeting in the Morning/Delegate Council Meeting in the Afternoon
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Mortgage brokers and all other “finan-cial institutions” as defined by the RedFlags Rule that are governed by theFederal Trade Commission (FTC) havean additional 90 days to prepare forcompliance the Red Flag Rule. The term“financial institutions,” as it applies tothis rule, is defined very broadly toinclude about everyone in a credittransaction and includes all mortgageoriginators.
Mortgage brokers, being under theFTC’s oversight for this rule, are amongthe business categoriesoffered the longest com-pliance timeframe. Thisdelayed enforcementperiod only applies to thefinancial institutions thatwill be under the FTC’soversight, the financialinstitutions governed bythe Federal Reserve andother federal agencieshave been required to bein compliance since Nov.1, 2008 and are subject toenforcement of the RedFlags Rule since that date.
In addition to theextended deadline, the FTChas provided a Web site ofnew Red Flags Rule resourcesat www.ftc.gov/redflagsrule.This Web site offers help inunderstanding the rule, aswell as a template to assistwith creating a complianceprogram for your compa-ny. This new Web site is the result of theFTC’s outreach efforts during the pastyear in which the staff learned thatsome industries (with the mortgageindustry being one of those with con-cerns) within the FTC’s jurisdiction wereuncertain about their companies’responsibilities under the Red FlagRule. The FTC staff has developed thepublished materials on the above listedsite to help explain what types of enti-ties are covered and how they mightdevelop their identity theft preventionprograms.
The Red Flags Rule is one of thelast parts of the 2003 Fair andAccurate Credit Transactions Act(FACTA) to be implemented. Speaking
about the debate of the broadness ofCongress’s Red Flags direction, FTCChairman Jon Leibowitz stated,“Given the ongoing debate aboutwhether Congress wrote this provi-sion too broadly, delaying enforce-ment of the Red Flags Rule will allowindustries and associations to shareguidance with their members, pro-vide low-risk entities an opportunityto use the template in developingtheir programs, and give Congresstime to consider the issue further.”
Now, mortgage origina-tors have a variety ofresources available tothem to make sure theyare in compliance beforethe Aug. 1 enforcementbegins. Many credit report-ing agencies also offertheir clients Red Flagscompliance programs andproducts. If your firm hasnot yet created its RedFlags program, the next 60days are crucial to imple-mentation.
Since this is the secondtime the compliance datehas been postponed, anycompanies found to benot in compliance afterAug. 1 are not likely to beoffered much sympathyfrom the FTC. Fines mostlikely are going to besteep as the Red FlagRule is intended to
reduce the potential for identity theft,which has been the top consumer com-plaint to the FTC for the past five years.
For a copy of the complete FTC announcement on the postpone-ment to Aug. 1, log on towww.ftc.gov/opa/2009/04/redflagsrule.shtm.
Terry W. Clemans is the executive directorof the National Credit ReportingAssociation Inc. (NCRA). He may bereached at (630) 539-1525 or e-mail [email protected].
Visit the National CreditReporting Association Inc.(NCRA) on the Web at
www.ncrainc.org.
“Fines most likelyare going to be steep
as the Red FlagsRule is intended to
reduce the potentialfor identity theft,
which has been thetop consumer com-
plaint to the FTC forthe past five years.”
Official government Web siteoffers help with new rule
By Terry W. Clemans
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How Strong is the FHA Loan?Over the past few months, we haveheard much about all of the bank loanfailures, Fannie Mae and Freddie Macgoing bankrupt, the commercial lendingmarket heading south, and Wall Streettaking a bath on toxic loans. Our wholeeconomy has been wrecked as a result ofthese bad loans. It was not just a badbatch of loans or just a particular type ofloan, but practically all cate-gories of loans. That is exceptfor one, the Federal HousingAdministration (FHA) loan.Thus far, no FHA bailoutshave occurred or have beenthe subject of major discus-sion.
The FHA or the U.S.Department of Housingand Urban Development(HUD) loan has beenaround for a long time,since 1934 in fact. FHA isthe largest insurer ofmortgages in the world.The authority has insuredmore than 34 millionhome loans since itsinception. Arguably, itoffered one of the firstsub-prime loans and hasbeen doing so for threequarters of a century. FHAloans are sold and man-aged as sub-prime loansand are under the scrutinyof the HUD purview. In recent years,many banks and Wall Street types took itupon themselves to offer their own sub-prime loans. They charged high fees andinterest rates. Many thought that theywere making more money by makingtheir own sub-prime loans, than theywould have funding them as FHA loans.The FHA loan suffered and dropped inpopularity. This went on for some timeuntil the non-FHA sub-prime loans beganto hit the proverbial fan. FHA, not havingmade huge volumes of loans during thatperiod, has emerged stronger and is nowone of the few current alternatives forsub-prime borrowers.
The FHA approves its own apprais-ers. It has not found it necessary to
resort to any such new requirements aswith Fannie and Freddie and the HomeValuation Code of Conduct (HVCC). FHAdoes not require that any organizationsbe put into place to monitor appraisers,it does this through its own reviewprocess. The FHA makes loans up to98.15 percent of the appraised value ofthe collateral used to secure the loan.
Borrowers usually putdown between three per-cent and five percent of theamount of the loan as adownpayment. Borrowersneed a credit score of 580or higher and may qualifyfor payments equaling upto 30 percent of theirincome.
Up until the early1990s, the FHA had about15 percent of the homepurchase market. Thisamount dwindled, due tocompetition from othersub-prime lenders, toabout four percent ofhomes sold in 2006.Recent changes in thefinancial markets have dra-matically reversed thistrend. On June 18, HUDInspector General KennethDonahue told the HouseFinancial Services Committeeon Oversights and
Investigations that FHA’s share of thehome-loan market has skyrocketed to63 percent so far this year.
In spite of the fact that the FHA hasnever required a government bailout inits 75-year history, the Wall StreetJournal recently reported that themortgage giant might require just thatin the near future. Its reserve fund fellto three percent of its 2008 mortgageportfolio balance and its delinquencyrate increased from 6.2 percent a yearearlier to 7.5 percent last year. Federallaw requires the reserve fund to remainabove two percent.
“Based on the numbers we’re seeing,
continued on page 14continued on page 18
“Our whole economyhas been wrecked asa result of these badloans. It was not justa bad batch of loansor just a particular
type of loan, butpractically all cate-
gories of loans. Thatis except for one, the
Federal HousingAdministration
(FHA) loan.”
By Charlie W. Elliott Jr., MAI, SRAObama Administrationreleases financial regula-tory reform plan details
U.S. President BarackObama’s Administrationhas released a White Paperdetailing its Financial
Reform Plan to overhaul current regu-lation of financial firms and markets,and provide new tools for the govern-ment to manage potential future finan-cial crises. Several proposals directlyaffecting the mortgage brokerageindustry include creating a single feder-al regulatory agency, the ConsumerFinancial Protection Agency (CFPA),adopting new loan product disclosurestandards aimed at transparency andsimplicity for consumer protection, andrequiring compensation of brokers,originators, sponsors, and underwritersto be linked to the longer-term per-formance of securitized loans.
The National Association of MortgageBrokers (NAMB) has commended theObama Administration for recognizingand taking action to strengthen thesecuritization markets through new reg-ulations and supervision calling forincreased transparency and disclosuresby all originators, underwriters andcredit reporting agencies. NAMBapplauds provisions calling for all origi-nators to disclose all direct and indirectincome. Mortgage brokers have beendisclosing all direct and indirect incomesince 1992 and NAMB believes this dis-closure should be used as a model fordisclosing hidden lender payments totheir employees called “overages“ andservice release premiums.
“It is time for lenders and banks tofinally come clean and disclose thesesecret payments as mortgage brokershave for 17 years,” said NAMB PastPresident Marc Savitt, CRMS. “We thankthe Obama Administration for recogniz-ing the need to force lenders and banksto disclose to consumers their hiddenfees. This will help consumers compareloan products between banks, lendersand mortgage brokers.”
However, NAMB sees specific practicalflaws with requiring regulations con-necting broker compensation withlonger term performance of the underly-ing loans. Mortgage brokers earn theircompensation when they find their cus-tomer a loan and follow the transaction
to close. Lenders create mortgage prod-ucts, determine the type of risk they arelooking for and pricing of that risk. TheWhite House proposal shifts the risks oftheir underwriting failures to the mort-gage broker without an increase in com-pensation for that shift. As stated in theWhite Paper, “The financial crisis wastriggered by a breakdown in creditunderwriting standards in subprime andother residential mortgage markets.”
NAMB has long advocated for con-sumer protection through transparencyand simplification in the mortgageindustry. The CFPA would level the play-ing field for all loan originators and pre-vent entities from falling through thecracks between jurisdiction and enforce-ment of numerous regulatory agencies.NAMB welcomes transparency. AlthoughNAMB agrees with the intent of the CFPAto simplify the mortgage process; NAMBwould caution such a regulator frompotentially causing unintended harm tothe consumer. Proposals to standardizemortgage products could have seriousconsequences for consumers shopping tofind the most suitable and cost effectiveloan. NAMB would welcome the oppor-tunity to participate in the clarification of“plain vanilla” products to ensure con-sumers have affordable options forobtaining homeownership in the future.For more information, visit www.financial-stability.gov or www.namb.org.
NAMB selects Home LoanAdvocates as its loanmodification specialist
The National Associationof Mortgage Brokers
(NAMB) has signed a contract with HomeLoan Advocates to act as its endorsed serv-ice provider for consumer home loanmodification. After researching more than20 nationally-recognized loan modifica-tion firms, Home Loan Advocates was cho-sen to launch a referral program for loanoriginators to extend home loan modifi-cation service to their clients, based onthe company’s “no up-front fee” policy.
David Bartels, president of Home LoanAdvocates, will teach mortgage originatorsthe best practices used to process loanmodifications and negotiate affordablemortgage payments for troubled home-owners. Additionally, Art “Ski” Swiatkowski, a
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Date Indicator Summary
A reading of “1” has the lowestimpact on rates, while “10” has thehighest. Although carefully verified,data are not guaranteed as to accura-cy or completeness. BestInfo Inc.cannot be held responsible for anydirect or incidental loss or liabilityincurred by applying any of the infor-mation or opinions in this feature.
Provided exclusively to NationalMortgage Professional Magazine byDavid Beadle, president of BestInfoInc., the BestRates cell, pager and email rate alert service for mortgageindustry subscribers. Send your inquiryto [email protected] forfull details on a free two-week trialsubscription.
July 23June Existing Home Sales
July 28July ConsumerConfidence
July 30Weekly Jobless Claims
July 31Q2 GDP
Home sales statistics are caught between a rock and a hard place. If sales begin to rise, there is a stronglikelihood that prospective sellers who have delayed placing their homes on the market due to weak demandwill rush to post a “for sale” sign on their lawn. The result will be another addition to already bulging inven-tories, swelled by the number of foreclosed homes. Meanwhile, a continuing cutback on consumer creditcould put an additional squeeze on household budgets, resulting in additional foreclosure activity as theunemployment rate rises. And that sets the stage for a double-dip recession. The June new home salesreport will be released on July 27.
It’s no secret that consumer attitudes about the economy have been one step away from depressed. Even ifrespondents to surveys claim they are feeling a bit better about the outlook, all it takes is a surge in gaso-line prices or a drop in the stock market to trigger another tale of woe. And at the end of the day, it doesn’tmatter what people say, but rather, what they do with their money. Right now, most consumers are stickingto the basics. So long as this trend persists, the economy will be unable to expand at anything close to itsprevious pace. That’s because consumer outlays account for over two-thirds of U.S. gross domestic product.And the government cannot perpetually spend enough money to approximate that $9 trillion per year.
The layoff figures showed a glimmer of hope in the third week of June when the number of continuing claimsfor weekly jobless benefits fell for the first time since early January. But hopes that it would be the start ofa trend were dashed a week later, when continuing claims moved back up again. And the “new claims” fig-ure never made it below 600,000, falling to 605,000 on June 6 before rising back up to May levels as thefallout from the automobile industry’s extended summertime plant shutdowns spread to related industries.If consumers decide to keep their older vehicles either because they cannot afford new ones or because theycannot obtain low-rate financing, the manufacturing malaise may continue.
The initial reading on second-quarter Gross Domestic Product will be released on this date, and will beviewed in light of the 5.5 percent decline for the first quarter and the 6.3 percent decline in last year’s fourthquarter. There’s great hope on Wall Street that the expected negative Q2 results will put the worst of the long-running recession behind us, with positive GDP numbers from the third quarter onward. But if geopoliticalturmoil flares, the H1N1 influenza pandemic returns with a vengeance or the tightening consumer creditnoose escalates, the chances for a deepening recession will rise and it could be a long slog before the econ-omy returns to any semblance of normalcy.
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An Assault on Fairness: QuashMortgagee Letter 2008-38, Part IThe views and opinions expressed in thefollowing article do not necessarily reflectthe views and opinions of NationalMortgage Professional Magazine, theNational Association of Mortgage Brokers,the National Association of ProfessionalMortgage Women and the National CreditReporting Association Inc.
Author’s note: In the dying days of the BushAdministration (Dec. 5, 2008), the FederalHousing Administration (FHA) issuedMortgagee Letter 2008-38 (ML-08-38). ML-08-38 is a raw deal for America’s seniors whohave taken, who are taking or who plan to
take Home Equity Conversion Mortgage(HECM) reverse mortgages, the dominantprogram in the U.S. reverse mortgage mar-ket. “An Assault on Fairness: QuashMortgagee Letter 2008-38, Part I” shows whywe believe ML-08-38 is a raw deal for seniorsand their heirs/estate, and why we are ask-ing the U.S. Department of Housing andUrban Development (HUD) to quash it.
By shifting HECM non-recourse policy todeny seniors and their heirs a key benefitof their expensive mortgage insurance pre-miums, by imposing arms-length ruleswhich turn off seniors’ heirs and cost tax-
payers money, FHA Mortgagee Letter 2008-38 is an assault not only on fairness, butalso on a core homeowner right: The rightto reclaim the family homestead or thefamily farm from a creditor without a snag.It should be repealed forthwith.
Since my March 18, op-ed inOrigination News (http://brokeruni-verse.com/originationnews/views/?story_id=130), feedback from senior poli-cy-level people at HUD points unmis-takably to misguided assumptionsbehind the flawed mortgagee letter.
Part one of this article examines theassumptions in the HUD feedback. Part twolooks at why the new arms-length rules inML-08-38, when fully understood and fullydisclosed to consumers, will turn away sen-iors and their relatives from HECM. It con-cludes by showing that ML-08-38 is costly totaxpayers and unjust to seniors and their rel-atives. Two days after my Origination Newsop-ed piece, this e-mail, among others fromsenior policy-level people at HUD, came in:
“Yes, well, I would agree that it’s of concernthat we’ve closed the one loophole that exist-ed—that is, heirs could buy the propertiesfrom the estate to keep the home, but notpay off the full loan balance. Other thanthat, you’re actually offering up some inac-curate statements about the program’s histo-ry. Although many people said, ‘Neither theborrower nor the heirs will ever owe morethan the value of the home,’ that’s an inac-curate statement on their part and our guid-ance has never said as much. Our policyposition has always been: Upon sale, theborrower or heirs will not owe more than the
value … This distinction is very clear in ourregulations. So the Mortgagee Letter (ML)does not represent any change in policy posi-tion on this matter. Therefore, the ML [2008-38] that has been charged is appropriateand consistent with historical policy. And,the definition of non-recourse is just as wesaid it was—so that doesn’t represent achange. So, the only change presented in thisnew ML is that that the heirs cannot buy theproperty from the estate to avoid paying offthe full loan balance.”
A major insurance benefit or a loophole?Assumption number one: The 20-year-old language and industry-wide under-standing in pre-ML-08-38 paragraph 1-3C of the HECM Handbook contain aloophole. ML-08-38 is a regulatoryloophole plug 20 years after the fact.Again, let’s review the language ofchapter one, paragraph 3C (1-3C) of theHUD HECM Handbook 4235.1 Rev.-1:
“The HECM is a ‘non-recourse’ loan. Thismeans that the HECM borrower (or his orher estate) will never [emphasis added] owemore than the loan balance or the value ofthe property, whichever is less [emphasisadded]; and no assets other than the homemust be used to repay the debt.”
Far from being a loophole, the abovelanguage expressly affirms and codifies amajor benefit for which every HECM bor-rower is required to pay mortgage insur-
continued on page 13
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What type of education does SAFErequire?SAFE requires 20 hours of pre-licen-sure education and eight hours ofannual continuing education. States
Berri Leslie worked for the state ofWashington Department of FinancialInstitutions during their NationwideMortgage Licensing System (NMLS) transi-tion and is currently working for the OregonDepartment of Finance & CorporateSecurities helping them implement theSecure and Fair Enforcement (SAFE) Act.Having worked in both Oregon andWashington, Berri has a unique perspectivewith NMLS and SAFE Act issues. Berri hasagreed to answer some of our burningquestions regarding the NationwideMortgage Licensing System. The followinginformation is provided to help you under-stand the requirements, when they will berequired, and what will be involved.
What is the Secure and FairEnforcement (SAFE) Act?SAFE is the Secure and Fair EnforcementAct passed as part of HR 3221—it wassigned by President Bush on July 30, 2008.
How does SAFE affect lenders andloan originators?SAFE requires all mortgage loan origi-nators to be either state-licensed or fed-erally-registered. All loan originatorsmust be licensed or registered using theNationwide Mortgage Licensing System(NMLS), an expanded version of NMLS.
When was the NMLS first developed?State regulatory agencies recognizedearly on that the rapid expansion andevolution of the mortgage industrydemanded a more robust regulatoryframework that was efficient and effec-tive. In 2003, a nationwide task force ofstate regulators began developing auniform licensing registry, similar towhat has been done by state agenciesin the securities and investment advi-sor industries. State regulators devel-oped the NMLS in order to: Increaseconsumer protection, enhance supervi-sion and streamline the licensingprocess.
How does the NMLS relate to theSAFE Act?The NMLS establishes protocols forissuing unique identifiers for all loanoriginators. NMLS processes criminalbackground checks, approves pre-licensure and continuing educationcourses, and is responsible to developa qualified test.
Who has to register within the NMLS?All mortgage loan originators mustbe either state-licensed or federally-registered.
Nationwide Mortgage Licensing System: Who, What,
Where, When, Why?
By Linda Moore MacCoy
may require hours beyond thisthreshold.
How many states are currently usingNMLS?Twenty-seven states are currently usingNMLS.
By what date will most states beusing the NMLS?Most states will be on the NMLS by April2010.
Do bank, mortgage bank and creditunion employees need to be regis-tered? Do their originators need totake the tests?Federal agencies are developing proce-dures to register employees of federal-
ly-insured depositories and subsidiarieswith NMLS. Registered loan officersmust complete a criminal backgroundcheck and submit employment historyand experience. They will also coordi-nate with NMLS to assign registeredloan originators a unique identifier.
Under SAFE, who is responsible toapprove loan originator education?The SAFE Act requires that the NMLSreview and approve all pre-licensureand continuing education courses thatare to be offered to state-licensed mort-gage loan originators and are intendedto satisfy the 20 hours of pre-licensureeducation and/or eight hours of annual
continued on page 12
An interview with Berri Leslie, State of Oregon Department of Finance and Corporate Securities
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continuing education. In order tomeet its mandate as required by theSAFE Act, the NMLS requires that thoseindividuals/organizations who desireto have their pre-licensure or continu-ing education courses approved by theNMLS must first register and be grant-ed approval to become an “NMLS-Approved” course provider. Uponbecoming NMLS-approved, courseproviders can then submit to havetheir courses approved by NMLS.
What is the Web address for NMLS?NMLS may be found on the Web atwww.stateregulatoryregistry.org/NMLS/AM/Template.cfm?Section=Home3.
How often will renewals occur?The licensing period is January-December, and renewals occur annu-ally in November and December.
What is the best way for loan origina-tors to stay informed about all ofthese changes?Since each state has specific require-ments and differing implementationplans, the best way to stay informedis to read all announcements andcommunications that come from yourstate licensing agency. Once you areon the NMLS system, the system itself
will also send you announcementsand updates. Make sure to be regular-ly checking your state’s Web site andthe NMLS Resource Center.
When you worked on theNMLS and Registry transi-tion in Washington, whatwas the most frustratingissue?Loan originators and com-panies waiting until theend of our “transitiondeadlines” was frustrat-ing. Washington sent outmany letters, e-mails andeven offered to provideon-site training for com-panies about the NMLS,but some folks still waiteduntil the last minute!
What is the chief com-plaint you hear fromloan originators aboutall these new changes?The biggest complaint isthat the system is diffi-cult and confusing. Idon’t think the system isreally that difficult, but rather, it’snew and most new technologies arechallenging at first. Folks who start
nationwide mortgage licensing continued from page 11
early, participate in the many trainingcourses offered and stay informed,won’t have any trouble!
Linda’s comments are shown belowafter researching several issues on theNMLS:
We, the National Academy of FinancialLiteracy, recently sponsored a free
Webinar that was offeredto and sponsored byNational Association ofProfessional MortgageWomen (NAPMW) mem-bers exclusively. BerriLeslie was our guestspeaker and she provid-ed an overview of NMLSand Registry, and gaveus a demonstration of theNMLS Web site. Duringthe recent Webinar, oneof the topics of discussionwas requirements andtesting for banker origi-nators, bank originatorsand credit union origina-tors. The system informationchanges almost daily, asplanning and rules go intoeffect; however, it wasnoted that these origina-tor requirements have notbeen announced as of yet.
The following link provides a list ofstates that are integrated and/or tran-sitioning into NMLS. Note that each
state listed provides a link to the stateWeb site: www.stateregulatoryreg-istry.org/AM/Template.cfm?Section=Participating_States1.
The following link provides origina-tor information: www.stateregulato-ryregistry.org/NMLS/AM/Template.cfm?Section=The_Industry.
The following language is from theNMLS Web site, and can be found in the“Educator Provider” section of the Web site:
NMLS has set the following fees forTest Administration and EducationServices. These fees will be in effect for2009 and are subject to change.
Test administration1. SAFE Mortgage Loan Originator Test� National component: $92
100 items (appointment time, threehours)
� Each unique state component: $6945-55 items (appointment time, twohours)
Each mortgage loan originator(MLO) is required to pass a test whichwill consist of at least two compo-nents: A National Component and aUnique State Component. Fees arepayable by an individual who is regis-tering to take the SAFE Act test com-ponents or by the company whichmay be enrolling its MLOs for the testcomponents. Please feel free to e-mail
continued on page 14
“State regulatoryagencies recognized
early on that the rapidexpansion and evolution of the
mortgage industrydemanded a morerobust regulatory
framework that wasefficient and effective.”
Berri Leslie
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ance premiums. Those premiums coverboth crossover risk (protecting lenderfrom property value decline at loan termi-nation) and the recourse risk (protectingborrower from paying more than home’smarket value at loan termination).
The above language was itself a 1994explanation of non-recourse in the origi-nal HUD HECM Handbook 4235.1 of Aug.24, 1989. Here is the original non-recourselanguage (read: historical policy):
“The lender’s recovery from the borrowerwill be limited to the value of the home.There will be no deficiency judgmenttaken against the borrower or theestate.” [Section 1-12-B, p. 1-6]
So where is the appropriateness ofML-08-38? Where is the consistency ofML-08-38 with historical policy? Andwhere is the policy foundation for theformulators of ML-08-38? There is none.
And sadly, with ML-08-38, lender-investor (and successors) benefit/right isunimpaired, but borrower-heirs/estatebenefit/right is arbitrarily taken away byadministrative fiat without an Act ofCongress. This is an imbalance. For theparty paying the hefty mortgage insur-ance premiums, this is a grave injustice.
Is ML-08-38 a change inHECM Non-Recourse Policy?While I leave you, the reader, to judge theinaccuracies in my March 18 op-ed, let’s lookat the second premise in the HUD e-mail:Public and industry understanding andinterpretation of paragraph 1-3C is wrong:
“Although many people said, ‘Neither the bor-rower nor the heirs will ever owe more thanthe value of the home,’ that’s an inaccuratestatement on their part and our guidance hasnever said as much. Our policy position hasalways been: Upon sale, the borrower or heirswill not owe more than the value … This dis-tinction is very clear in our regulations. So theMortgagee Letter (ML) does not represent anychange in policy position on this matter.”
Really! “… that’s an inaccurate statementon their part and our guidance has neversaid as much.” Incredible! It is hard to under-stand these assertions, especially comingfrom high and responsible policy-level peo-ple at HUD. Please go back and re-read para-graph 1-3C of the HECM Handbook, as wellas the original non-recourse language I refer-enced above and ask yourself: Is that the lan-guage of “many people?” Wasn’t that HUDpolicy language (guidance) for 20 years untilthe travesty of ML-08-38?
Fannie Mae, HECM’s sole investorfrom program’s inception in 1989 until2006 and its dominant buyer today, usesthe pre-ML-08-38 language of paragraph1-3C. Here is a Fannie Mae consumereducation Q&A posted in August 2004:
“Question: Will my heirs owe anything tothe mortgage lender if I die?Answer: Upon your death, the loan balance,
consisting of payments made to you or on yourbehalf plus accrued interest, becomes due andpayable. Your heirs may repay the loan bal-ance by selling the home or by paying off theHECM loan so that they may keep the home. Ifthe loan balance exceeds the value of yourproperty, your heirs will owe no more than thevalue of the property. FHA insurance will coverany balance due the lender. No additionalfinancial claims may be made against yourheirs or estate.” [emphasis added] (www.fan-niemae.com/global/pdf/homebuyers/hecm-striper.pdf)
The National Reverse Mortgage
forward on reverse continued from page 10
Lenders Association (NRMLA), the indus-try’s preeminent trade group, has a sim-ilar understanding of non-recourse asdemonstrated by this consumer safe-guard information on its Web site, datingback to May 2005:
“Asset Protection. The reverse mortgage isa ‘non-recourse’ loan. This means thatthe amount due can never exceed whatthe home is worth. Title to the homealways remains with the borrower. Whenthe loan becomes due, the lender isrepaid the sum of funds advanced plusthe accrued interest, but never more thanthe value of the house. If there is remain-ing value, it belongs to the homeowner orthe estate.”
Note that since this article was first
posted on my blog, Atare’s Report, on May18, NRMLA has revised this wording on itsWeb site to reflect ML-08-38. However,NRMLA’s revision does not change its his-torical accuracy in the context of this arti-cle, nor has it revised thousands of hardcopies in circulation for years(www.reversemortgage.org/AboutReverseMortgages/ConsumerSafeguards/tabid/429/Default.aspx).
The Fannie Mae and the NRMLA con-sumer information postings on non-recourse tell us what Fannie Mae andNRMLA believed was the correct interpreta-tion of paragraph 1-3C (of the HECMHandbook 4235.1 Rev.-1) well before HUDpublished ML-08-38 on Dec. 5, 2008.
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I think it’s going in the wrong direc-tion,” HUD Inspector General KennethDonohue replied when asked at a con-gressional hearing if the FHA wouldneed bailout funds.
While the FHA loan may requirefederal assistance to get us throughthis economic crisis, it currently is thebest product going for the sub-primemarket. It is currently the product ofchoice for lenders, requiring a lowdownpayment loan, where credithistory is also of a concern. Thirty-year amortization is available, andFHA does tons of refinancing. TheFHA is also broker-friendly. Mortgage
brokers can still order appraisalsdirectly from FHA-approved apprais-ers on FHA loans, as has been thecase all along.
Even if a bailout is required, the needfor the FHA product is so vital to oureconomy that no major change in theavailability of new loans is anticipated.
Charlie W. Elliott Jr., MAI, SRA, is presi-dent of Elliott & Company Appraisers, anational real estate appraisal company.He can be reached at (800) 854-5889, e-mail [email protected] or visit hiscompany’s Web site, www.appraisalsany-where.com.
value nation continued from page 8
me at [email protected] ifyou have questions or comments on thecontents of this article.
Linda Moore MacCoy is the executivedirector of the National Academy ofFinancial Literacy. She has 35 years ofexperience in mortgage lending, havingworked for a bank, a savings and loan,and several mortgage companies.Linda has been originating loans since1974. Her experience in lendingextends to 12 years of selling mortgageautomation with Contour Software,Mortgage Company Management, and25 years training and educating mort-gage professionals and real estateagents. She teaches lending law, stateand federal; lending automation, and
personal lending and origination skills.Additionally, she has served as a con-sultant to mortgage professionals formany years and has been writing forvarious publications over the years.She may be reached by phone at (503)639-5500 or e-mail [email protected].
Visit the NationalAcademy of FinancialLiteracy blog online at
National Academy ofFinancial Literacy, where users cantake part in discussions involving thelatest software/tools, changes in theindustry, and have the ability to askleading experts the question thatinvolve your everyday workflow.
nationwide mortgage licensing continued from page 12
Dear Brian:I went to a seminar of yours about ayear back in Cleveland. Almost all mybusiness is refinances, and I’m looking togo after the certified public accountants(CPAs) in the area and I’m not to surehow to approach it. Looking for a littlebit of advice.—David Brooks, Ohio
Dear David:Thanks for the question. Getting refer-rals from outside sources is one of themost frustrating things we all gothrough as loan officers. What most ofus do is find a professional like an attor-ney, financial planner, insurance agent,or as in your case, an accountant, andwe rush over to meet with them. Then,we proceed to tell them how wonderfulwe are and conclude with a strong pitchbegging them for business. No surprisethat most of us fail.
The very first thing you must realizeis that everyone, regardless of theirbusiness, is tuned into only one stationW-I-F-M … otherwise known as: What’sIn it For Me? Bet you are tuned intothat very same station when a whole-sale rep walks into your office. They tellyou how great their programs are, howwonderful they are to work with, andthen, just like you, they proceed to begyou for business.
So what does work?In all relationships, you must providevalue to the other side. They mustimmediately see ways they can person-ally benefit from the relationship. Andby the way, the fact that you will pro-vide their clients with good service isnot the value I am talking about here.That is a given. If you cannot providegood service, you shouldn’t even be inthe business!
Now, the question is … how can youprovide this service?
First, start the meeting by trying tofind some common ground. The bestway I have found to do this is to makethe initial contact based on the factthat you both have a mutual client.Every time you take an application,write down the name and phone num-ber of your client’s accountant, attor-ney and financial planner. If they don’thave one, make sure you are in a posi-tion to refer them to your preferred listof providers. I not only give them the
What Station Are You Tuned Into?attorney, financial planner or accoun-tant’s business card, but I continue byexplaining the importance of the serv-ice they provide and why I am person-ally recommending them. But, I don’tstop there. I then call the person Ireferred and tell them that I have giventheir name to my clients and that theyshould expect a call. This allows me tostay in touch with this referral partnerand prove to them that I am a valuableresource they can depend on to growtheir business.
Let me also give you a few otherways I have found to provide value.
NewslettersEach month, I send out a newsletter tomy database of past clients, currentprospects, friends, family, and ofcourse, referral partners (including realestate agents and builders). Thenewsletter allows me to stay in front ofthese referral partners. I also allowthem to write articles for my newsletter(if and only if) they also allow me towrite articles for their newsletter. Thisthen allows them to receive myendorsement and be exposed to myclients, and it allows me to providetheir clients with information and thereferral partner’s endorsement.
Web siteMy Web site has a resource section, andI allow my partners and referral sourcesto post an ad for their services on mysite. I then also want to have a spot ontheir site. Big idea … make sure yourpartner’s link opens on your site so itdoesn’t take people away from yoursite. This is referred to as a “window inwindow” and your Webmaster shouldbe able to set that up easily.
TeleclassesThis is a really big way to provide value.One of the ways I stay in touch with myclient base is through free monthlyteleclasses. I invite my referral partnersto come on as guests and tell my clientsabout some financial topic that is ofinterest to them (or should be). I thengo back to my referral partners andoffer to do the same for their clients. Ipay for the conference line and allother related costs.
As an example … since I am anexpert at working with buyers whohave had a bankruptcy or other credit-
related issues, I recently held a teleclassfor a bankruptcy attorney where Ishowed his clients how to get into ahome with very little down and attrac-tive rates even if they had a bankruptcyor other credit challenges.
There were two big benefits here.First, I was providing information hisclients were looking for and needed.Second, I was allowing him to now beseen as not just another bankruptcyattorney who can help them file, butrather, as a trusted legal advisor who canhelp them get back on track financially.
Value for value … this was a truewin- win. I got five new clients, and hewill get referrals by staying in touchwith his clients and providing themwith useful information.
So David, I hope that helps. Thinkoutside the box and always have thebest interest of your referral partners atheart. By truly helping them you will
help yourself. And forget that everyoneis tuned into W-I-F-M.
If you have a question you would likeBrian to answer in this column, pleasesend an e-mail with “Ask BrianQuestion” in the subject line [email protected].
Brian Sacks is CEO of www.loanofficerfor-mula.com. He has been an industry expertfor more than 25 years, closing 6,000-plusloans totaling $1 billion. You can readBrian’s 32-page special report entitled “TheDeath of Mortgage Origination as WeKnow It” and “The 10 Things You Must DoNow to Survive and Thrive” at www.loanof-ficerformula.com/mp. This report sells for$97 and has been downloaded by morethan 9,200 originators and company own-ers, but is free for a limited time for readersof National Mortgage ProfessionalMagazine. He may be reached by e-mail [email protected].
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Incomplete non-recourseprotection for a full price?Moreover, we must keep in mind thatHECM borrowers who are relying on ML-08-38 description of the non-recourse limit arepaying their full mortgage insurance premi-ums (MIPs), but are not getting the full non-recourse protection for their heirs that HUDassumed when calculating the HECM MIP.Below is the key section from the HUD doc-ument that describes the HECM model usedby HUD to calculate payment amounts andMIP charges during the program’s design. Itclearly never anticipated that HECM bor-rowers or their heirs would be liable forrepayments exceeding home values. To thecontrary, the MIP was calculated on theassumption that they would NOT beresponsible for such repayments. In otherwords, the HECM MIP was calculated to fitHUD Handbook 4235.1 (and subsequentREV-1) definition. So, HECM borrowers havebeen paying for this protection but not get-ting it. Here is the key section from theHECM model document:
“The debt is non-recourse, which meansthat if the borrower is unable to repay theloan when due, the lender looks only to thevalue of the mortgaged property for repay-ment and not to any other assets of theborrower or the borrower’s estate.”(Taken from “The FHA Home EquityConversion Mortgage InsuranceDemonstration: A Model to CalculateBorrower Payments and InsuranceRisk,” HUD Office of Policy Developmentand Research, October 1990, Part II-A,page 3. HUD User # HUD-005802*s)
Furthermore, in deciding whether topay loan balance or market value, theoperative phrase in paragraph 1-3C of theHECM Handbook is “… whichever is less.”When there is a crossover event at loan ter-mination, market value is always less. It fol-lows that if the borrower’s heirs/estatewants to reclaim the property, a legitimateneed in some HECM loan terminationcases, they will (and should) pay marketvalue because it is an option for which theborrower has paid a very steep price.
Is ML-08-38 consistentwith historical HECM non-recourse policy?The final assertions in the feedback thatML-08-38 “… is appropriate and consis-tent with historical policy” and “the defi-nition of non-recourse is just as we said itwas—so that doesn’t represent a change”strain credulity again because we haveevery right to expect the best from ourfederal civil servants. In other words, ifML-08-38 is not a new rule, why issue it inthe first place? Why the conditionalrecasting of non-recourse?
The fact is … ML-08-38 is a clumsy pol-icy response to a specific policy recom-mendation from AARP. For years, HUDwas violating its own non-recourse policyin practice. That is, it was forcing heirswho want to keep the family homestead
to pay the full loan balance in breach ofthe contractual obligation it assumedwhen it structured the program’s MIPs aswe have established above. Enter senioradvocate colossus, AARP.
In a major national report released onDec. 7, 2007 (“Reverse Mortgages: NicheProduct or Mainstream Solution?”pages.111-112), AARP asked HUD to stopthe above practice and harmonize itsHECM non-recourse practice with its stat-ed policy in paragraph 1-3C of the HECMHandbook. Here is what AARP said in thereport (contrast it with assertions in theHUD feedback we are looking at):
forward on reverse continued from page 13
“Some borrowers’ heirs may be in for a rudesurprise when they learn that HUD is admin-istering a key provision of the HECM pro-gram in a way that differs from what loanofficers or counselors may have told them.”
It quoted paragraph 1-3C verbatimand continued …
“As actually administered by HUD, however,the non-recourse provision only applies tothe estate if it sells the home. If the estatedoes not do so, it must repay the full amountof the loan balance, even if it exceeds thevalue of the home. But HUD has neverannounced that its non-recourse practice dif-fers from the policy in its HECM programhandbook or that new regulations or policyletters have altered the handbook’s non-recourse policy.
“As a result, many consumers may havebeen misinformed about this key definingcharacteristic of the HECM loan [emphasisadded]. HUD should resolve the discrepan-cy between its stated non-recourse policyand its practice by conforming its practiceto the definition in the HECM handbook.”
What is clear from the above statementis that AARP’s understanding of HECMnon-recourse policy is in line with FannieMae’s, with NRMLA’s, with industry partic-ipants,’ and with the public’s understand-ing of the policy. Equally clear is that AARPfound the inconsistency in HUD’s statedHECM non-recourse policy and actualpractice sufficiently troubling to recom-mend the harmonization of practice with
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Each month, National MortgageProfessional Magazine will focus on oneof the industry’s top players in our“Mortgage Professional of the Month”feature. Our readers are encouraged tocontact us by e-mail at [email protected] for consideration in beingfeatured in a future “MortgageProfessional of the Month” column.
This month, we had a chance to chatwith Mat Ishbia, national sales managerfor United Wholesale Mortgage. In his roleas national sales manager, Mat overseessales staff, customer acquisition and reten-tion, and all company expansion efforts.His efforts have made United WholesaleMortgage (UWM) one of the top 10 whole-sale lenders in the industry. He is nostranger to the secondary market or theoperations side of the business. When itcomes to evaluating market conditions,monitoring interest rates or reviewing loanfiles, Mat’s experience is sure to find thebest scenario for each broker working withUWM to obtain maximum commission.
How did you first get involved in themortgage industry? After graduating from Michigan StateUniversity, I was looking for a companywhere I could utilize my skills and couldgrow. I received an opportunity to join agrowing local company with room to moveup. United Wholesale Mortgage (UWM) was
looking for a niche and an identity, andwith the dedication of a great team, wewere able create it together. I always want-ed to be involved with a company that wasshooting for the sky, and at UWM, that wasthe idea. They wanted to be number oneand were open to people coming in withfresh ideas. I started on the ground floorand worked in almost every department,from set up to secondary marketing tosales and everything in between.
I worked each day, thinking of what Iwould do when I eventually got my shotto make the decisions and steer the com-pany. At the end of 2005, I got the oppor-tunity, and at that time, we were a smallplayer in the wholesale world. With thehelp of all the wonderful people at UWM,we have grown to the national level thatwe are at today.
What keeps you in the mortgage busi-ness and drives you to continue tosupport the mortgage broker?I feel that the mortgage broker communi-ty is essential to serving consumers at thehighest level, and with our support, bro-kers can offer excellent customer serviceto their clients. Losing the mortgage bro-ker, which I don’t think will ever occur,would be the worst thing that could hap-pen to the mortgage business. Brokersare the people who connect with so manyconsumers, helping them to achieve the
Mat Ishbia, National Sales Manager, United Wholesale MortgageAmerican dream of homeownership. Thatcare and concern for the borrowers issomething that many large institutionsjust cannot provide and mortgage brokersdo an excellent job of that.
As a mortgage broker, do you feelthat it is important to have a deepknowledge of the secondary marketside of the business?I believe it is critical for all people in themortgage industry to truly understand theloan process, from start to finish, and thefinish is well beyond the closing. It is short-sided to not recognize that a loan that does-n’t perform or that goes delinquent is notonly costly to the borrower and the lender,but the effects are much farther reaching.We at UWM believe it is a privilege to get aFederal Housing Administration (FHA) loanand we treat our ability to offer this productwith the utmost respect. We expect our bro-ker network to also recognize this, andknow that we are in this industry togetherand that every loan matters.
As a sales manager of a company whoworks with some of the most success-ful brokers in the country, is focusingon delivering the lowest rate a suc-cessful strategy?I believe that mortgage brokers shouldfocus their time and effort on one impor-tant thing and that is reaching out to asmany borrowers as possible and handlingthem to the best of their ability. Spendingyour time monitoring rates, which none ofus have any control of, is, in my opinion,taking time away from originating files,providing great service to your customers,and working for more referrals. So, if Iwere a mortgage broker, I would focusexclusively on origination and when yousee a rate that works for your customer,lock it in and focus on the next loan.Building your business isn’t about rates, itis about being a financial professional andbuilding a solid book of business that youcan service for years to come.
We all know that many lenders haveopted to go strictly retail, leaving thewholesale marketplace with a lack of
lenders. Why has UWM remained com-mitted to the mortgage broker com-munity since 2001? We are an organization committed tobeing a major player in the wholesale mar-ket for years and years to come. We oncewere a broker here at UWM, and we real-ized that brokers weren’t provided manyof the luxuries that direct lenders andbanks were being allowed. We set out tochange that problem by providing brokersthe level of service, access to underwriters,and open lines of communication toalways know what’s going with their loans,so they can keep their customers andRealtors informed at all times. This level ofservice has helped many brokers in ournetwork grow their business to a level thatthey didn’t believe was possible. They havedone that by impressing Realtors and bor-rowers to the point of receiving more refer-rals than ever before. These brokers havefigured out that closing more loans andbuilding a strong business is more impor-tant than chasing the highest yield spreadpremium. A broker who works smarter willgain more referrals and ultimately, be in astronger financial position.
Tell us about the unique businessculture you and your team createdat UWM.At UWM, we have a unique business cul-ture that is based on work ethic and a pos-itive attitude. Every employee at UWM hasbought into these core principles and hashelped make us a great place to work. AtUWM, our daily operations are very sim-ple, from sales to underwriting to closing.
The account executive’s responsibilitiesare to respond to broker questions andmake calls to them about our speed andservice. Our account executives (AEs) are dif-ferent than most. Not only do they answertheir inbound call, but they make out-bound calls to broker shops and see if thereare any FHA loans, we can help them closefast. They don’t leave without making sureevery loan officer’s e-mail or call is returned.Each day, our underwriting staff gets ahandful of loans from their assigned AE andtheir job is to underwrite them in a timelyfashion and provide top notch service to the
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policy. And it is abundantly clear thatveracity is absent in HUD’s assertion in ML-08-38 that some program participantswere “mistaken” about the policy.
There is another crucial point weshould consider about paragraph 1-3Cand HUD’s reinterpretation in ML-08-38.The paragraph clearly decrees that“…and no assets other than the homemust be used to repay the debt.”
By forcing heirs/estate, in violation of itsown rules, to repay the loan balance, otherassets other than the home’s value are beingused to repay the loan. HUD cannot have itboth ways, for we are a nation of laws andrules. It needs to respect and follow its ownrules. It needs to honor and abide by its owncontractual obligations if it expects industryparticipants within its administrative sphereof influence to do the same.
It is noteworthy that the authors of the2007 AARP report include Ken Scholen,Donald L. Redfoot, and S. Kathi Brown,individuals with deep knowledge of HECMand policy issues around reverse mort-gages and HECMs in particular. KenScholen is the father of the HECM and oneof the leading authorities on reverse mort-gages in America. For anyone at HUD tosuggest that someone such as Ken Scholenis “mistaken” about HECM non-recourse
policy when Ken Scholen was the guidingspirit behind HECM is questionable at bestand disingenuous at worst.
From the foregoing, we conclude thatML-08-38 was based on flawed assump-tions. We affirm that ML-08-38 represents amajor departure from historical HECM non-recourse policy. And we assert that ML-08-38 is unfair to America’s seniors and theirheirs/estate. It should be quashed.
Author and columnist, Atare E. Agbamu,CRMS is director of reverse mortgages atMinneapolis-based AdvisorNet MortgageLLC. A member of the BusinessWeek MarketAdvisory Board, Agbamu is author of ThinkReverse! and more than 100 articles onreverse mortgages. Through his advisoryfirm, ThinkReverse LLC, Agbamu advisesfinancial professionals, institutions and reg-ulators across the country. In a 2007 nation-al report on reverse mortgages, the AARPcited Agbamu’s work. He can be reached byphone at (612) 436-3711 or (612) 203-9434,and e-mail at [email protected] [email protected].
Visit author Atare E. Agbamu’sblog at http://thinkreverse.comfor his thoughts and insights on
the reverse mortgage marketplace.
forward on reverse continued from page 15
brokers who have questions pertaining totheir submitted files. The closers get thefiles, and within 24 hours, they have alreadysent out the closing docs and communicat-ed directly with the title company to con-firm that the closing is set and everythingneeded has been provided. Our entire teamis committed to making brokers feel likemortgage bankers. With the level of cus-tomer service and accessibility we provide,our brokers always know what is going onwith their loans. Each person at UWMunderstands that the brokers are the key toour business, and we go above and beyondeach day to let them know how much weappreciate these business relationships.
What would you say is the mortgageindustry’s most underutilized loanprogram?The industry’s most underutilized programis the FHA streamline. It is a great way tomake sure that your borrower always hasthe best available rate. The streamline is anentitlement that is granted to customerswho close on FHA loans. The insurance thatthe customer pays entitles them to astreamline refinance that will offer the low-est available rate. There is no income qual-ification, sometimes no appraisal required,and as long as the borrower makes all theirmortgage payments on time, then theyqualify. Along with the streamline, the gov-ernment 3/1 adjustable-rate mortgage(ARM) is another product that, if used cor-rectly, can save consumers a lot of moneyand help them have the lowest payment atall times. The FHA 3/1 ARM is unlike the
sub-prime ARMs, as with the governmentARM, you can always refinance, regardlessof property values dropping or loss ofincome. The rate doesn’t change for threeyears and after the three years, it can onlygo down one percent annually and thereare no pre-payment penalties. The caps onthe FHA 3/1 Treasury ARM are 1/1/5 and atwo percent margin, which means that ifthe borrower’s start rate is 3.75 percent, themaximum their rate can be on the changedate three years later is 4.75 percent, whichis still well below the fixed rates right now.This product, if used in conjunction withthe streamline, is a powerful tool to helpmany brokers originate more loans andmany consumers have a lower payment.
As the sales manager for one of thetop 10 wholesalers, can you share anyinsights, philosophies, books or anyother strategies that can help themortgage broker community?I am a big believer of under promisingand over delivering. That is what UWMwas built on and what I personally believein. No matter what I am doing, I alwaysshoot to exceed the expectations that I set.I believe that your word is one thing youcannot compromise in this industry, andwe are focused at UWM on delivering onour word each day. We advertise our 24-to 48-hour turn times and we alwayscome through within that time frame orbefore. Our submissions closing five toseven business days is something we offerand if the brokers want to participate ontheir end, we make that happen for them.
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www.qcmortgage.com800-939-5383
Q Full Service QC/QA
Q Default Reviews
Q HVCC Reporting
Q IRS & SSA Reports
Q Contract Underwriting
Q Loan Imaging Storage
Q Software Lease/Purchase
Q Modification Reviews
Web: www.appraisalsanywhere.com
news flash continued from page 8
certified NAMB trainer and member of theNAMB Task Force on Loan Modification,will introduce the NAMB-endorsed referralprogram for loan originators, and discusshow and why Home Loan Advocates waschosen.
“In today’s market, loan originators areoverwhelmed with clients who do notqualify for a refinance, but still need ourhelp,” stated NAMB Past President GeorgeHanzimanolis. “Our goal is to provide atrusted resource to our members—on astate and national level—so they have avehicle to help home owners across thecountry who are struggling to make theirmortgage payments.”
“Fifty percent of all homeowners whoattempt to manage their own loan modi-fication fail, simply because they don’thave the experience to submit the pack-age properly,” said Bartels. “Even if a bor-rower has been turned down, in mostcases we are able to resubmit the packageand get the mortgage payment reduced.”For more information, visit www.namb.org.
CSBS reports to Congress:States on track to meetSAFE deadline
The Conference of StateBank Supervisors (CSBS)has released the firstAnnual Report of the
Nationwide Mortgage Licensing System
(NMLS) to the U.S. Department ofHousing and Urban Development (HUD)and Congress to provide information onthe System’s performance in its firstyear of operation.
Selected NMLS highlights from theNMLS Annual Report include: Sevenstates participated in NMLS at launchand 19 states were participating byyear-end; 14 states processed 30,897license renewals through NMLS inNovember and December; 756,578transaction requests by licensees to the19 participating states were processedby NMLS; more than $24 million in statelicense fees were collected and dis-bursed by NMLS; 147,758 inquiries fromusers were answered by the NMLS callcenter; 700,000-plus visits were made tothe NMLS Resources Web site; and morethan 30 live user-training sessions,instructing 1,300-plus professionals,were conducted in 2008.
According to the report, state imple-mentation of the Secure and FairEnforcement for Mortgage Licensing Actof 2008 (SAFE Act), [Title V of theHousing and Economic Recovery Act of2008] which requires states to pass leg-islation to meet the minimum require-ments established by the Act by July 31,2009, has proceeded expeditiously.
To date, 32 states have passed legis-lation to bring them into compliance
with the SAFE Act, and an additional 15states have introduced legislation tobecome SAFE Act-compliant. CSBSPresident and CEO Neil Milner calledthe SAFE Act “monumental in its fore-sight and the positive impact it willhave upon supervision of the residen-tial mortgage market.” CSBS and NMLShave spearheaded a nationwide effortto achieve uniform implementation ofthe SAFE Act within a one-year timeperiod.
Additionally, federal regulators havebegun to build upon the NMLS, as theFederal Housing Finance Agency (FHFA)illustrated by requiring Freddie Mac andFannie Mae to obtain unique identifiersfor mortgage loan originators, loanorigination companies, field appraisersand supervisory appraisers for loanapplications taken after Jan. 1, 2010.For more information, visitwww.stateregulatoryregistry.org.
Federal agencies proposerule to implement SAFEAct LO registrationrequirements
The federal financial insti-tution regulatory agen-cies are together issuingfor public comment pro-
posed rules requiring mortgage loan orig-inators who are employees of Agency-reg-ulated institutions to meet the registrationrequirements of the Secure and FairEnforcement for Mortgage Licensing Act of2008 (SAFE Act).
The SAFE Act requires the agencies tojointly develop and maintain a system forregistering residential mortgage loan origi-nators who are employees of agency-regu-lated institutions, including national andstate banks, savings associations, creditunions, and farm credit system institu-tions, and certain of their subsidiaries.These mortgage loan originators (LOs) mustbe registered with the NationwideMortgage Licensing System (NMLS), a data-base established by the Conference of StateBank Supervisors (CSBS) and the AmericanAssociation of Residential MortgageRegulators (AARMR) to support the licens-ing of mortgage loan originators by thestates. As part of this registration process,mortgage loan originators must furnish tothe NMLS background information and fin-gerprints for a background check. The SAFEAct generally prohibits employees of anagency-regulated institution from originat-ing residential mortgage loans without firstregistering with the registry.
The proposal, which is being issuedjointly by the Office of the Comptroller ofthe Currency, Board of Governors of theFederal Reserve System, Federal DepositInsurance Corporation, Office of ThriftSupervision, Farm Credit Administration,and National Credit Union Administration,establishes the registration requirementsfor mortgage loan originators employedby agency-regulated institutions, as wellas requirements for these institutions,including the adoption of policies andprocedures to ensure compliance withthe SAFE Act and final rule. As required bythe law, the proposal also requires thesemortgage loan originators to obtain a
unique identifier through the registry thatwill remain with that originator, regard-less of changes in employment. When thesystem is fully operational, consumers willbe able to use the unique identifiers toaccess employment and other back-ground information of registered mort-gage LOs. Pursuant to the SAFE Act, theproposal further requires these mortgageloan originators to provide their uniqueidentifiers to consumers in certain cir-cumstances and Agency-regulated institu-tions to make them available to con-sumers.
Because modification of the registryto accept federal registrations involvescomplex technical issues, the proposedrule provides for a delay in implementa-tion of the registration requirementsuntil 180 days after the registrybecomes operational and available forinitial federal registrations.For more information, visit www.statereg-ulatoryregistry.org.
HUD Secretary Donovanand National Fair HousingAlliance roll out mediacampaign
U.S. Department of Housingand Urban Development(HUD) Secretary ShaunDonovan and the National
Fair Housing Alliance (NFHA) have rolledout their national media campaign tofight foreclosures and discrimination.NFHA and HUD have partnered to createa national media campaign that informsconsumers about alternatives to foreclo-sure, how to avoid predatory loan termsand how to recognize and report rentaldiscrimination. NFHA’s members nation-wide, the Leadership Conference on CivilRights, and other groups will assist withdistributing the materials.
“Many families, particularly minorities,have been victims of aggressive and mis-leading marketing of risky loan productsand foreclosure rescue scams,” said HUDSecretary Donovan. “As we implementPresident Obama’s Making HomeAffordable plan to deal with the foreclo-sure crisis we need to ensure that familiesin trouble with their mortgages are nothurt a second time with scams. Foreclosurescams are destructive, devastating, anddeceptive, and I’m thrilled that theNational Fair Housing Alliance, in partner-ship with HUD is launching an ad cam-paign to address the fair housing chal-lenges in the foreclosure crisis, includingpredatory lending and foreclosure scams.”
The campaign is designed to target:(1) Families in immediate need to refi-nance; (2) Families in or on the brink offoreclosure; (3) Families facing evictionor already in the rental market: and (4)Families ready to purchase a home.
The media campaign will include printads and posters addressing foreclosureprevention, predatory lending and rentaldiscrimination in English, Spanish andChinese; television public serviceannouncements (PSAs) in English andSpanish; radio PSAs in English andSpanish; a movie slide; and an airport
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For more information, call 800.473.4633, ext. 150.
www.informativeresearch.com/RFhelp
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Information contained in the “RegulatoryCompliance Outlook” column is notintended to be and is not a source of legaladvice. The views expressed are those ofthe contributing author and do not neces-sarily reflect the views or policies ofNational Mortgage ProfessionalMagazine (NMP), any governmentalagency, business entity, sponsoringorganization or institution. NMP makesno representation concerning and doesnot guarantee the source, originality,accuracy, completeness or reliability ofany statement, information, data, find-ing, interpretation, advice, opinion orview presented therein.
Mortgage DisclosureImprovement Act (MDIA)The Mortgage Disclosure ImprovementAct (MDIA) amends the Truth-in-Lending Act (TILA) and provides newregulatory structure. However, manyprovisions go into effect on July 30,2009, not on Oct. 1, 2009 (as MDIAinitially required). The FederalReserve Board re-set the effectivedate to July 30, 2009, pursuant toamendments made to the MDIA onMay 8, 2009 by the EmergencyEconomic Stabilization Act.
Effective: July 30, 2009, certainrequirements must be implemented:
� Early disclosure: Now extends to“any extension of credit secured bythe dwelling of a consumer.”Excluding home equity lines of cred-it (HELOCs), early disclosure must beimplemented for any mortgage loansubject to the Real Estate SettlementProcedures Act (RESPA) that issecured by the consumer’s dwelling(i.e., purchase money, refinances,second mortgages, on primary andsecond homes).
� Disclosure statement: Now requiresthe following statement: “You arenot required to complete this agree-ment merely because you havereceived these disclosures or signeda loan application.”
� Fee restrictions: Prior to issuingearly disclosures, collection is limit-ed to a reasonable fee for the creditreport.
� Re-disclosure—Three day waitingperiod: If the annual percentagerate (APR) is out of tolerance (notmore than 1/8 of one percentabove or below the actual APR), re-disclosure is required three busi-ness days prior to consummation.Counting of days as “business days”is defined as all calendar daysexcept Sundays and legal holidays.May be waived for bona fide finan-cial emergencies.
� Prior to consummation—Sevenday waiting period: From deliveryor mailing of the TILA Disclosure,prior to consummation. Timingbegins when a creditor mails or oth-erwise delivers the TILA Disclosure.Counting of days as “business days”is defined as all calendar daysexcept Sundays and legal holidays.May be waived for bona fide finan-cial emergencies.
Home Valuation Code ofConduct (HVCC)Both Fannie Mae and Freddie Macadopted the HVCC, whose effectivedate of implementation was May 1,2009. One area of implementation
requires careful enforcement in orderto assure that originators will meetthese guidelines. Specifically, compli-ance with the requirement to receiptthe appraisal.
“Borrower Receipt of Appraisal”(Section II) of the HVCC states: “Thelender shall ensure that the borrower isprovided a copy of any appraisal reportconcerning the borrower’s subjectproperty promptly upon completion atno additional cost to the borrower, andin any event no less than three daysprior to the closing of the loan. Theborrower may waive this three-dayrequirement. The lender may requirethe borrower to reimburse the lenderfor the cost of the appraisal.”
Action steps� Develop a process for implementing
two new forms, one to acknowledgereceipt of the appraisal and anotherto waive the three-day rule.
� Develop procedures to test theprocess to be sure that these formsare being timely disclosed. Monitorfor corrective actions.
Secure and FairEnforcement forMortgage Licensing Act of2008 (SAFE Act)The SAFE Act requires the Conferenceof State Bank Supervisors (CSBS) andthe American Association ofResidential Mortgage Regulators(AARMR) to establish a NationwideMortgage Licensing System andRegistry (NMLSR) for loan originators.All states must participate in theNMLSR and develop a licensing systemfor mortgage loan originators thatmeets certain, minimum standards setforth in the SAFE Act, as determined bythe U.S. Department of Housing andUrban Development (HUD), by Aug.1,2009 (or Aug. 1, 2010 in the case oflegislatures that meet biennially).
A loan originator must be registeredif that originator is an employee of an
insured depository institution (or oneof its subsidiaries) or originates loansfor a state licensed mortgage company(i.e., a lender or mortgage broker). If astate is not in compliance with all therequirements of the SAFE Act licensingmandates, it still must comply withcertain standards. Therefore, all affect-ed financial institutions should proac-tively implement basic standards andprocedures on behalf of their loanoriginators.
Action steps� Develop procedures to obtain crimi-
nal history background checks.� Assist loan originators with under-
standing the initial examinationrequirements prior to licensure.
� Offer a table to calculate the individ-ual’s net worth requirement.
� Institute an ongoing policy to offerindividual credit checks.
� Arrange training venues for the ini-tial education needed prior to licen-sure.
� Determine and announce state-spe-cific, continuing education require-ments.
� Provide assistance in ascertaining anindividual surety bond.
Submit your questions …Do you have a regulatory complianceissue that you’d like to see addressed inthe “Regulatory Compliance Outlook”column? If so, e-mail your issue or con-cern to Jonathan Foxx at [email protected].
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].
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This information is for use by mortgage professionals only and should not be distributed to or used byconsumers or other third-parties. Information is accurate as of date of printing and is subject to changewithout notice.Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009Wells Fargo Bank, N.A. AllRights Reserved. #64153 4/09
Shared Vision, Shared Success.SM
WELLS FARGO WHOLESALE LENDING
Make YourWayWith A Lender Committed ToLeading Responsible ChangeWells FargoWholesale Lending is dedicated to working with mortgage brokers who are committedto five key principles for long-term industry success:
Responsibility: Ensure fair and responsible lending and borrower education are top priorities.
Quality: Produce high quality loans.
Controls: Better manage our collective risk and eliminate fraud.
Excellence: Create, promote and adhere to industry-leading standards of excellence.
Efficiency: Develop capabilities that drive greater efficiency and ease of use between ourcompanies.
Together, we will lead the way, helping to establish a foundation for a stronger, healthier andmore responsible industry.
Share in this vision. For more information, tools, ideas and market insights visit our Shared Vision,Shared Success.SM web site located on www.brokersfirst.com.
RESPONSIBILITY • QUALITY • CONTROLS • EXCELLENCE • EFFICIENCY
news flash continued from page 18
diorama. In total, 26 products with somevariations in English, Spanish and Chinesewill be produced for this campaign. For more information, visit www.hud.govor www.nationalfairhousing.org.
HOPE NOW reports:Mortgage industry com-pletes record number ofworkouts
HOPE NOW, the privatesector alliance of mort-gage servicers, non-
profit counselors and investors that
works to prevent foreclosures and keephomeowners in their homes, hasannounced that its members and thelarger mortgage lending industry com-pleted 270,000 homeowner solutions inApril. This is the largest number in anymonth since HOPE NOW began to com-pile data.
In April 2009, HOPE NOW membersand the larger mortgage lendingindustry modified 127,000 mortgagesand completed 143,000 repaymentplans. This slight drop in the numberof modifications and increase in pay-
ment plans from March was partiallycaused by the industry beginning toimplement the Obama administra-tion’s Home Affordable ModificationProgram (HAMP). Under the conven-tions of the HAMP, loans are subjectto a three-month-trial period before amodification can be completed and,therefore, are often classified asrepayment plans or trial modifica-tions. Some of these trial modifica-tions will result in formal reporting ofmodifications after 90 days. As aresult and, as expected, the numberof repayment plans increased and thenumber of modifications decreasedfrom what otherwise might have beenrecorded.
According to Faith Schwartz, HOPE
NOW’s executive director, the mortgagelending industry is working hard tomake HAMP a successful tool to fightthe foreclosure crisis. “Many HOPE NOWmembers see HAMP as an importantopportunity for homeowners in trou-ble,” said Schwartz. “The number ofhomeowners helped by the industryeach month should continue toincrease as this program continues tobe implemented.”
The HOPE NOW April data shows:The number of 60-plus days delin-quencies was the same in April as inMarch at just under three million;foreclosure starts dropped by morethan 16 percent, 290,000 in March to249,000 in April; and foreclosure salesincreased, from 53,000 in March to65,000 in April.
According to Michael Bright, HOPENOW’s chief statistician, many HAMPtrial modifications initially show upas repayment plans. “The increase inrepayment plans recorded in April isdue, in part, to the first trial modifi-cations completed under the admin-istration’s program,” said Bright.“Assuming borrowers complete thetrial period successfully as mandatedby the government, these loans willeventually be recorded as havingbeen modified.”For more information, visitwww.hopenow.com.
Mortgagebot releasesresults of its Benchmarks2009 report
Mortgagebot hasannounced the results
of its Benchmarks 2009 report, a bi-annual comprehensive survey andanalysis of online lending trends, prac-tices and procedures that have beenimplemented at the more than 5,000mortgage-lending Web sites thatMortgagebot maintains for its morethan 900 clients nationwide.
“Once again, we’re pleased to pro-vide this unique and insightful researchto our clients,” said Mortgagebot presi-dent and CEO Scott Happ. “OurBenchmarks 2009 study analyzes theoverall online lending practices of allMortgagebot clients, and the results canhelp them get a sense of how effective-ly they’re responding to industrytrends—and how well their businessescompare with their peers.”
Benchmarks 2009 is the third suchstudy to be done by Mortgagebot, thefirst one having been published in 2005and the second one in 2007. The newstudy is divided into several sectionsthat present detailed data analysis onsuch topics as: Loan purpose andapproval rates; application volumes byorigination channel; submitted andabandoned application trends; andonline borrower activity and demo-graphic profiles.
“Our client family is made up ofbanks and credit unions of every sizeand description,” noted Happ. “So ourstudy represents the real-world activity
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At this stage of the game, all should know the specifics and background of theHome Valuation Code of Conduct (HVCC). The text of the six-page document hasquickly become legendary, the beginning of the end for many independentappraisal operations, and the starting point of positive and negative tirades on thetopic that could, and have, lasted hours.
As stated on the Freddie Mac Web site, the HVCC is the result of a joint agree-ment between Freddie Mac, the Federal Housing Finance Agency (FHFA), and theNew York State Attorney General [Andrew Cuomo] to enhance the independenceand accuracy of the appraisal process, and provide added protections for home-buyers, mortgage investors and the housing market.
The National Association of Mortgage Brokers (NAMB) issued a Call to Actionin early June where the association urged its membership to bombard the officeof New York State Attorney General Andrew Cuomo and the offices of FannieMae and Freddie Mac with calls and inquiries, and letters and e-mails on theHVCC issue. NAMB has also set up a special HVCC Resource Center on their Website for brokers, lenders and consumers to learn more about HVCC and openeda special e-mail account, [email protected], where stories on the effects of theHVCC could be shared. You will find a sampling of some of those stories below.
In addition to educating its membership on the intricacies of the HVCC, NAMBImmediate Past President Marc Savitt has been fielding mainstream mediainquiries and has been lining up media appearances to discuss the matter. OnJune 18, Savitt testified before the House Financial Services Subcommittee onOversight and Investigations at a hearing titled, “Strengthening Oversight andPreventing Fraud in FHA and Other HUD Programs.” Savitt, along with representa-tives from HUD, the Mortgage Bankers Association, and other industry-relatedfields, shared his membership’s concerns with the HVCC and how it has negative-ly impacted brokers nationwide since its enactment.
“Our fragile housing market is once again on the verge of collapse,” said Savitt at thehearing. “We are looking for appraisal independence and we don’t have that with HVCC.”
National Mortgage Professional Magazine had the opportunity to sample itsreaders, the ones directly impacted by the HVCC, to provide an overview of howmortgage operations across the nation are dealing with this new regulatory hur-dle. Take a look at the perspectives below, and we urge you to share your thoughtsand feeling with other readers online at www.nationalmortgageprofessional.com.
From the mortgage broker’s perspective …John AnthonyACA Mortgage Company LLC • Mechanicsburg, Pa.The consumer loses … period. Appraisals are more expensive. It takes longer to get the appraisals back,which means the rate lock either needs to be longer (which is more expensive)or they [consumers] have to pay to extend their rate lock or both. Then, if the
borrower wishes to change lenders, they may have to pay for another appraisal dependingthe losing lender’s policies on releasing the appraisal and/or they (the consumer) may expe-rience costly delays in getting the appraisal transferred. These are real world realities.
It will seem like standard operating procedure in a year, but we will know, evenif the consumer does not, that there was a better way and the consumer is payingthousands more in interest on their mortgage for no real benefit.
Good appraisers are talking about getting out of the business. The lender doesnot pay for extensions, the consumer does (as I mentioned above). There is littlemotivation to expedite this process.
“Enhancing the independence and integrity of the appraisal process.”—Freddie Mac Home Valuation Code of Conduct Fact Sheet
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A simple real example … my customer gave me a check on the 19th of Maywhich we sent that day to the lender (who does not accept credit card payments).Before HVCC, I would have had the appraisal in my hands by a quality, licensed,local appraiser by the 22nd. I am told by the lender that they might hear back onthe appraisal (which by the way might be the very same appraiser doing the samework for less money) by June 2.
Two weeks versus three days? Real world. Even those who do take credit cardshave similar turnaround times.
Thousands in interest? For what value? So, that the third-party originators(TPOs) cannot influence the appraisal?
The HVCC, as I understand, it was born from an investigation of a lender inap-propriately influencing appraised values, not TPOs. The HVCC, as it turned out,does not impact the lenders, and therefore, has no effect on the very organizationthe investigation found at fault.
Real world … operating costs are higher, turnaround times are slower, ratescost more to hold and the consumer does not end up with a better quality prod-uct. Fannie and Freddie will still be relying on the appraisal review process forquality control. We can only hope that a repeal is in the wings and that they studyhow negatively this impacts the consumer with little, if any, upside for the govern-ment-sponsored enterprises (GSEs).
Eduardo AdameHomeStart Capital LLC • Bellaire, TexasI am proud member of the National Association ofMortgage Brokers and I am already having severalproblems by using the lender’s “preferred”appraisers. We have a great reputation in the
Houston area, and our company is based on integrity, honestyand unmatched service to all of our clients. We do 100 percentof our business from referrals from previous clients and out-standing real estate agents.
We can no longer provide the service and low costs that weare known for because of the following reasons:
The last two appraisals I had performed by an appraisalmanagement company (AMC), in my opinion and even both ofmy buyer’s opinions, were overvalued. Both of my clients hadalmost 800 credit scores, putting 20 percent down on their pur-chases.
Both of them were really surprised of how much more the properties wereappraised for, since they both know the areas where they were buying extremelywell.
Some lenders have guidelines that clearly state that if the home appraises for120 percent more than the “Predominant Value” of the area, it automatically trig-gers an “Appraisal Review,” also performed by the AMC (in this case, it happenedto be the same company that performs the actual appraisals).
With both of my clients, we had to pay $360 for the appraisal, plus $50 to rushit because they can take more than five days to do the appraisal (which I couldhave done at no additional charge in one day with my previous appraiser). SinceMay 1, they have increased their cost to $405 for a 1004 Appraisal.
Plus, since both of them were overvalued, we had to order a review for $270 plusa $50 rush fee to get it back in three days. Both of my clients spent more than $700on appraisals on what we could have done faster and more efficiently for just $275.
I called the “Director of Appraisers” to argue the value of both appraisals and Iwas told that the value was correct … even the sellers of the properties whereshocked to learn of these “appraisal values.”
Scott StingleyStonebrook Mortgage • Boise, IdahoLenders and appraisal management companies (AMCs) will not acceptassignments of appraisals ordered through other AMCs as they cannotguarantee the appraisal was HVCC-compliant and do not want tohave an unsellable loan in their portfolio. The true issue resides with
the consumer who decides to change lenders once the process has been initiated.In these cases, the consumer will be responsible for a minimum of two appraisalsresulting in unnecessary expense and wasted time.
Glenda F. SweitzerTowne & Country Mortgage • Hamilton, Mont.We are already experiencing higher costs to the customer in the form of desk reviews andsecond appraisals. This is due to the fact that lenders are taking it upon themselves to dic-tate values by relying on unreliable sources, such as real estate agents, to determine val-ues in an area. They are also relying on county assessments to dictate values which arenowhere close to actual values.
I do believe that a rotation system should be put in place, but we now have newcompanies cropping up all over the place adding their own fees to the mix, alongwith trying to dictate fees paid to the appraisers. There is a threat there, in that ifappraisers do not agree to these new lower fees, then they will not get the busi-ness. This is happening all over the state of Montana.
The other problem we see is by the ordering of an appraisal by a lender, andthat appraisal being completed in the lender’s name, (the broker/borrower ischarged for that appraisal, by the way) we are not able to transfer that sameappraisal to another lender in such cases where the original lender may declinethe file. This is causing the re-ordering of appraisals on the same property, throughanother lender, causing double fees to the borrower/broker and increasing timeand effort and costs for the appraiser, which is subsequently causing higherappraisal fees.
Lisa SchreiberNetMore America • Walla Walla, Wash.NetMore America is accepting transfers, but we are seeing incon-sistency in the language that is being used. If we are to continuewith this process, more dialogue around standardization wouldbe helpful to all. We are doing our very best to comply, while
providing service to our clients, but it is difficult at best with no benefit toanyone (especially the consumer), except maybe the AMC [appraisal manage-ment company].
To give you a better feel for what we are seeing, NetMore hasemployed three people to manage the HVCC process. In addi-tion to these hires, we still have to utilize underwriters to eval-uate the appraisal we receive and deploy QC [quality control]technology which includes an AVM [automated valuationmodel] on all files. Based on those review mechanisms, we areseeing poor quality in comps used, improper paperwork provid-ed and poor response times when corrections are needed. All ofthis with no benefit/relief to using an AMC on the investor side(as we are still subject to yet more QC valuations), longer timesand higher costs.
Amazingly to me, we are also seeing very little push back onvalues once we have jumped through all these hurdles, whichproves to me that the process was not broken, but possiblyabused by a small group which led to the lawmakers’ overreac-tion. It always astonishes me that lawmakers continue to lack
the understanding of our business and end up only hurting the consumer towhom they are trying to protect.
Dan CunyusFirst Source Capital Mortgage Inc. • Van Alstyne, TexasThe recent mandate for a new and improved HVCC, however well-intentioned, seems to be a great example of the Law ofUnintended Consequences. From one man’s view, most of theproblems today are the direct result of relaxed credit and income
underwriting standards for residential real estate transactions. The currentsituation has less to do with appraisal data, and more to do with how theseloan products were actually conceived and born, and placed into the publicarena for consumption.
So, let’s review … clever Wall Street folks and cheap money policies and thepolitical desires of congressional members all combined to fund a variety of so-called “housing needs” to create an incredible and insatiable appetite for verylarge amounts of closed loans to securitized and sell as quickly as possible.Investors such as large commercial banks, investments banks, and the likes of AIGare now in shambles as a direct result of the rainbow stew served up by WallStreet.
Enter the mortgage originators … now the stage is set, the lights are up and thecameras ready. The money is “on ice,” ready to be offered to the public withoutclosing costs, regardless of job history, credit ratings or what the heck … even areal job! Don’t even mention a downpayment! If you can fog a mirror, you getloan! What a great deal!
Whoops … what went wrong … nobody is making a payment! Who can we findto blame for this mess anyway? Well for sure not certain members of Congress, orthe Fed, or those on Wall Street, or the poor unsuspecting investors who wereduped into purchasing the high-yield investments. We cannot place any blame onthe poor unsuspecting borrower, who was obviously strong-armed into signing theloan documents.
Folks, it is time for all of us who want the economy to recover, to take astand on the ill-conceived HVCC mandate. Appraisers, real estate agents, bro-kers and bankers all already have their own professional codes of conduct!The solution is not to institute a new standard for conduct, which is present-ly disrupting the flow of mortgage money from those who want to lend, tothose who can qualify to actually pay back the loan! Mortgage industry pro-fessionals must speak out about this ill-conceived mandate to reinvent the
From the wholesaler’s perspective …
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way appraisals are ordered and executed. As it now stands the present situa-tion has created the unintended consequence of making access to credit bythe many deserving and credit worthy borrowers much more difficult, not tomention the elimination of tens of thousands of jobs in the real estate indus-try, including real estate agents, brokers, bankers, appraisers, surveyors, titleand property insurance companies, inspection service vendors, and all themany hundreds of thousands of related support industry jobs.
So, sound off boys and girls! It is time to get out of your comfort zone, startwriting letters, making calls, and sending money to those who have the abil-ity to reverse this mandate, and who see this debacle the same way many ofus see it!
Tommy A. DuncanQuality Mortgage Services LLC • Franklin, Tenn.The consensus from National Mortgage Appraisers is the brokersdespise, with a passion, the HVCC, as well as some credit unions andcommunity banks. They feel they lose customer intimacy by bringingin a third party appraisal management company. The loan officers or
processors do not like having to provide their client with a credit card authoriza-tion form so the appraisal can be paid in advance. As the mortgage professional
knows their appraiser, they will learn to know their AMC. It is the AMC’s responsi-bility to strive for the highest customer relationships with the mortgage profes-sional and the AMC who has the ability to master the customer services to themortgage professional will do well.
I see it as business as usual. The mortgage professionals are ordering appraisalsjust like they were. The difference is there is one centralized order point, ratherthan having to keep up with multiple appraisers. The mortgage professional willspend less time tracking the appraisal because the AMC is acting as a liaisonbetween the borrower and the appraiser, giving the mortgage professionals moretime to make money.
Most mortgage professionals want AMCs to use their approved list. This isfine, but the appraisers that are not used to working with AMCs are the mostdifficult to work with as per pricing, scheduling and turn times. Some mort-gage professionals do not want to deviate from their list because they areafraid they may not get the evaluation they want. The relationship betweenthe mortgage professional and the appraiser is already established, andwhen the appraisal order is made, the appraiser knows what the mortgageprofessional usually requires. This is a double-edged sword and can cut bothways. I am not an advocate of using an existing appraiser list, but I haveaccepted appraiser lists in order to bring a level of continuity when startingnew relationships.
The next problem for AMCs is when the rotation of appraisers is made, theAMC uses an appraiser that is not liked by a lender or a mortgage profession-al and the lender or mortgage professional wants to blacklist an appraiser foran appraisal that was performed years ago. We ask for the letter of sanctionsor disbarment and therefore, we question the legitimacy of the blacklist. Wetake the position that the lender has not properly documented the disciplinaryactions against the appraiser without any opportunity for the appraiser toredeem his/herself. I believe that it is wrong for a lender to hold continuoussanctions against an appraiser, unless the appraiser has conducted some typeof appraisal fraud.
Here is an example, a nationally-known lender disciplined an appraiserfive years ago and issued a letter to the appraiser which the appraiseracknowledges. Since that time, the appraiser has submitted appraisalsthrough brokers/AMCs and the loans were underwritten and funded by thelender who issued a sanctions letter. The same appraiser completed anappraisal for us and the same lender had an underwriter reject the appraisalbecause the appraiser’s name was on a blacklist. The lender could not pro-duce a sanction letter which the appraiser retained. The appraiser had no dis-ciplinary action by the state or agency. The lender refused us a copy of theirblacklist so that we would not order an appraisal from their blacklist. Thelender had no future plans to give the appraiser another opportunity. The vic-tim is the borrower. The borrower had to pay for another appraisal and thenew appraisal was within a few hundred dollars of the previous appraisal thatwas performed by the blacklisted appraiser. The lender was coercing themortgage professional to use an AMC that the nationally-known lender owns.This particular appraiser is repealing the sanctions through the industrybecause of past accepted appraisals and plans to take this issue to theEvaluation Protection Institute.
As I come into contact with various lenders with mortgage banking status,community banks and credit unions, they are under the opinion they cancreate an internal AMC outside of the mortgage department. This is true fornow, but once attorneys start prosecuting lenders for Real Estate SettlementProcedures Act (RESPA) violations for inappropriate business affiliations andassociations, and kick-back fees, lenders will start making better use ofAMCs.
HVCC is not a law, but only a policy. There will be more heated discussions overHVCC as soon as more advocacy for fairness requiring the large lenders and banksto fall in line with the mortgage brokers comes to light. However, I do not see thischanging until Fannie Mae and Freddie Mac come out of conservatorship.Regardless if you agree or disagree with HVCC, one has to admit the industry istaking the right step in preventing undue persuasion and influence on theappraisers. I hear it from mortgage professionals and appraisers. Based on beingthe middle man, HVCC is the future and everyone will need to be flexible andadjust accordingly.
continued from page 23
From the appraisal management company’s(AMC) perspective …
Living With HVCC
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The ancient Roman god, Janus, was two-faced—his back-to-back visages lookingat the past and into the future—a sym-bolic representation of ineluctable tran-sitions through the passage of time, areminder of essential change from onecondition to another, whether for betteror worse. Like it or not, the yield spreadpremium (YSP) will begoing through its owntransition soon, and,depending on the poli-tics—and not necessarilythe facts—the essentialchange will be enduringand irreversible.
If the YSP is believed tobe a legitimate financingtool and proves to be a use-ful means in the service ofborrowers, it may yet sur-vive; if not, its demise is onthe way. At this time, it is indanger of becomingextinct! The House recentlypassed the MortgageReform and Anti-PredatoryLending Act,1 which willamend the Truth-in-Lending Act (TILA), and ithas gone to the Senate.2 Itsprovisions directly affectthe fate of the YSP. If itpasses on to the White House in its currentform and President Obama signs it, thislegislation will become law.
A key provision is the virtual removalof yield spread premiums!3
Prior to the enactment of the RealEstate Settlement Procedures Act(RESPA) in 1974, the U.S. Departmentof Housing and Urban Development(HUD) and the Veterans Administration(VA) issued a report asserting, amongst
other things, that “settlement chargesoften are based on factors unrelated tothe cost of providing the services,” andadvocated regulating settlement costs.This position was an underlying fea-ture of the debate, beginning in 1972,which led up to the formation ofRESPA.4 Congress decided that RESPA
should not implementprice controls, such assetting maximum allow-able costs, believinginstead that proper dis-closure and prohibitingcertain practices weresufficient to avoid abuse.HUD has maintained thatRESPA is not intended tobe a rate-making statute.And it has indicated invarious policy issuancesthat the YSP is not per selegal or illegal. Yet in thenear future the YSP—acomponent of total com-pensation, and a meanswhereby a borrower, ifproperly empowered,could actually determineits use—will be headingto the dustbin of history.
This controversy canbe considered by briefly
exploring certain evaluative criteria.Broadly, the following areas constitute
the core of the debate:
� Can the YSP cause price discrimination?� Can borrowers be charged more
because of the YSP?� Can the YSP provide a dollar for dol-
lar financing offset?� Does the YSP cover the cost of
goods and services?
Let us briefly consider each of thesequestions. Afterward, a suggestion willbe offered that, if implemented, wouldstrongly empower the borrower, fortifythe lender and broker relationship, pre-serve continuity and potency of marketforces, and save the YSP.
Price discrimination: Can the YSP cause price discrimination?There is some evidence that less sophis-ticated borrowers and borrowers withcertain racial profiles have paid higherloan costs. According to HUD’s Office ofPolicy Development and Research,“price discrimination has been knownto occur,” whereby “loan fees are high-ly correlated to race and educationcharacteristics, with African-Americanand Latino borrowers paying an aver-age of $415 and $365 more, respective-ly, than other borrowers.”5
HUD’s recent, final version ofRegulation X revisions,6 designed tocreate a more level playing field, werein part a response to a regulatoryimpact analysis—required by theRegulatory Flexibility Act—that stated“there is strong evidence of informa-tion asymmetry between mortgageoriginators and settlement serviceproviders and consumers, allowingloan originators to capture much of theconsumer surplus in this marketthrough price discrimination.”7 Totalloan costs are elevated in loans con-taining YSPs, discount points and sellercontributions to closing costs. The YSPmay not necessarily offer the borrowera savings, though it can be used toincrease the cost. “Research shows thatborrowers saved only $20 in upfrontcash for each $100 paid in YSP.Mortgage-brokered loans benefited theleast, saving only $7 per $100 in YSP.”8
Higher fees, lower savings, meaningincreased costs to borrowers, can leaddirectly to price discrimination.
Higher costs: Can borrowers be chargedmore because of the YSP? Mortgage brokers can obviouslyincrease their compensation by select-ing the lender that offers a higher YSPfor a loan, though another lender mayoffer a loan with similar features, butat a lower YSP. It doesn’t matter thatthe compensation is paid indirectly(i.e., YSP paid by lender), the con-sumer is ultimately paying for it. Ifsuch increased compensation is notused as a financing offset, the mort-gage broker could be incentivized tochoose the higher YSP, without havingto provide any additional financing,products, or services to the borrower.This is a prima facie violation ofRESPA,9 because a borrower’s upfrontcash requirements are not lowered, yetthe mortgage broker’s compensation isincreased in excess of what is reason-ably related to the total value of theorigination services provided by thebroker.10
Offset financing: Can theYSP provide a dollar fordollar financing offset?HUD has consistently taken the positionthat the YSP can play a significant role inoffsetting financing costs.11 In itsStatement of Policy 2001-1, HUD statedthat “a yield spread premium can be auseful means to pay some or all of a bor-rower’s settlement costs. In these cases,lender payments reduce the up-frontcash requirements to borrowers. Insome cases, borrowers are able to obtainloans without paying any upfront cashfor the services required in connectionwith the origination of the loan. Instead,the fees for these services are financedthrough a higher interest rate on theloan. The yield spread premium thuscan be a legitimate tool to assist the bor-rower”12 (emphasis added). Indeed, HUDbelieves this use of the YSP “fostershomeownership.”13 Analogous to thecase of the YSP having the potential tocause a higher cost loan, if the YSP isonly used to increase the borrower’sinterest rate as well as the broker’s over-all compensation, but does nothing tolower up-front cash requirements forthe borrower, this use of the YSP wouldnot be a bona fide source of financingand certainly violates RESPA.14
Goods and services: Doesthe YSP cover the cost ofgoods and services? This is an area that has been litigatedextensively and, even to this day, theoutcome is uncertain.
The legal landscape has stretched farand wide, in various jurisdictions, frominitially maintaining that the YSP is areferral prohibited by RESPA’s Section 8,15
to the YSP being a form of compensationand not a violation of RESPA;16 from theYSP being a permissible payment forgoods (i.e., loans with YSPs),17 to a rever-sal of that position, holding that the YSPwas potentially a prohibited referral feeunder Sections 8(a) and 8(c) of RESPA.18 Inthat latter ruling, a case decided by theCourt of Appeals for the Eleventh Circuit,in Culpepper v. Inland MortgageCorporation (Culpepper), the Courtoffered a two-pronged test to determineif the YSP was compliant with RESPA:
1. Are goods or services provided inexchange for the yield spread premi-um?; and
2. Was the YSP a payment in exchangefor those goods or services.
First, the court decided that the YSPwas not a payment for the good itself(i.e., the “good” being the loans withYSPs, table-funded), because the lender,not the broker, actually owned the loanalready. Second, the court decided thatthe YSP was not a payment for the gooditself, asserting that direct payments tothe broker is the allowable compensa-tion, and, in any event, given that theYSP is calculated on the basis of theloan’s interest rate, where there is noostensible difference between a loanwith a YSP and a loan without a YSP, theYSP had to be a prohibited referral fee.
“If the YSP is believedto be a legitimate
financing tool andproves to be a usefulmeans in the serviceof borrowers, it mayyet survive; if not, itsdemise is on the way.At this time, it is indanger of becoming
extinct!”
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HUD then weighed in, offering itsStatement of Policy 1999-1, and in sodoing offered its own Two-Part Test.Essentially, HUD’s position was (andstill is) that a mortgage broker’s totalcompensation is RESPA-compliant (1) if“goods or facilities were actually per-formed for the compensation paid,”and (2) if the “payments are reason-ably related to the value of the goodsor facilities that were actually fur-nished or services that were actuallyperformed.”19 HUD provided a list ofcompensable services which, althoughit is not (and was not meant to be)exhaustive, clearly identifies numer-ous services that mortgage brokersrender in return for direct and/or indi-rect compensation from the borrower.Importantly, HUD identified certaingoods provided by a mortgage broker,but it made clear that the loan (i.e., aloan with YSP, table-funded) was notitself a “good.” Explicitly, HUD statedthat, “while a broker may be compen-sated for goods or facilities actuallyfurnished or services actually per-formed, the loan itself, which isarranged by the mortgage broker, can-not be regarded as a ‘good’ that thebroker may sell to the lender and thatthe lender may pay for based upon theloan’s yield’s relation to market value,reasonable or otherwise.”20 Even thoughHUD had answered key questions,many courts still vacillate in theirinterpretations.
Indeed, litigation continued, bring-ing about an additional response from
HUD. Its 2001-1 Statement of Policy 21
was issued, in part, to clarify HUD’sposition on YSPs, due to a decision ofthe Court of Appeals for the EleventhCircuit, in Culpepper v. Irwin MortgageCorporation, which upheld certificationof a class in a case alleging that YSPsviolated Section 8 of RESPA.22 The Courthad found that the lender, pursuant toa prior understanding with mortgagebrokers, had paid YSPs to the brokersbased solely on the brokers’ delivery ofabove par interest rate loans.Furthermore, the court described HUD’s1999-1 Statement of Policy as “ambigu-ous.” At the time, other courts were ren-dering conflicting decisions. HUD’sresponse asserted the legality of YSPs,when services are actually rendered forcompensation reasonably related to thevalue of the services and it makes clearthe operational effectiveness and pur-pose of YSPs in increasing homeowner-ship, as well as identifying those areaswhere the YSP may be abused.
But how to determine that the com-pensation payments are reasonablyrelated to the value of the services actu-ally furnished and performed?
SuggestionImplicit in each of the criteria givenabove is the view that the YSP can beabused, though it may serve a legiti-mate purpose. Many commercial trans-actions are subject to abuse, if leftunregulated. To eliminate the YSP,when it is a useful means and legiti-mate tool to originating residential
mortgage loans, would not onlydeprive the borrower of its application,but also cause a pervasively destructiveimpact on the mortgage brokerageindustry. This is clearly a case that criesout for better regulation.
HUD had recommended regulatorymeasures in 1997, when it publisheda proposed rule to give a qualified“safe harbor” for payments to mort-gage brokers under RESPA’s Section 8.23
HUD proposed that there would be noviolation of RESPA—and a presump-tion would be made that broker fees,both direct and indirect, were legal—if a mortgage broker should enter“into a contract with consumersexplaining the broker’s functions(whether or not it represented theconsumer) and the total compensa-tion the broker would receive in thetransaction, before the consumerapplied for a loan.”24
Recent RESPA reform has been anattempt to remediate through increaseddisclosure. The new Good Faith Estimate(GFE), consisting of three pages, providesa rather thorough outline of the settle-ment charges. The GFE requires that theYSP to be disclosed more comprehen-sively, requiring a “credit” field to beused to disclose a yield spread premiumand a “charge” field to be used for dis-count points.25
However, does this go far enough indetermining the extent to which theYSP is applied to the loan and, impor-tantly, establish the “reasonableness”of this particular compensation for
goods or services actually rendered?After all, HUD’s remedy would simplybe to require an enhanced disclosure ofthe YSP to the borrower. Indeed, theMortgage Reform and Anti-PredatoryLending Act, mentioned above, willsurely add a whole new set of manda-tory disclosures to the already hugenumber of disclosures required byexisting law. But the resolution will notbe found in more and more disclosuresor by allowing the government to inter-pose itself between the consumer andprivate enterprise through more disclo-sure forms and promulgating arbitrarystandards.
An important piece is still missing,one that gives the consumer (and,therefore, market forces) the ability toset a fair market standard for compen-sation payments that are “reasonablyrelated to the value of the services actu-ally furnished and performed.”26 In thelong run, if appropriately implemented,it would also remedy many of the issuesinvolving price discrimination, highercosts, and offset financing, because itwould give the borrower control overthe use of the YSP.
The missing piece is simply to creditthe YSP directly to the borrower. Theborrower would then have the choiceto use the YSP in accordance with theborrower’s own interests. Once the bor-rower specifically authorizes how theYSP is to be used, a standard of “rea-sonableness” would be established.
continued on page 28
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yield spread premium continued from page 27
Market forces will respond accordingly,as borrowers agree to the utilization ofthe YSP. Placing the control of the YSPinto the hands of the borrower and let-ting its use be determined by the bor-rower will protect the borrower andprovide a true “safe harbor.”
Like the Roman god, Janus, we nowoccupy the middle ground between thepast and the future, between how theYSP has been used in the past and how(or even if) it will be used in the future.As events unfold, however, saving theYSP by empowering the borrower toauthorize its use may not go farenough! For the Service ReleasePremium (SRP), the undisclosed incomepaid to a lender when it sells an abovepar loan into the secondary market, isin some ways an analogue to the YSP.RESPA does not require a lender to dis-close the SRP to the borrower, though itdoes require a mortgage broker to dis-close the YSP. Should the YSP be revisedor eliminated without concomitantlychanging the application of the SRP?Legislation aimed at changing the YSP,but not the SRP, seems to favor thelender over the mortgage broker. Boththe lender and broker serve the con-sumer! Borrowers will benefit from theproper use of the YSP and the SRP. Infuture articles, we will explore the roleplayed by the SRP in originating resi-dential mortgage loans, and, impor-tantly, how revising the application ofthe SRP will benefit consumers, main-tain a stable market, and preserve thevitality of all loan originators.
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].
For more information onauthor Jonathan Foxx,visit Lenders Compliance
Group on the Web atwww.lenderscompliancegroup.com.
Footnotes1- HR 1728.2- Passed by the House on May 7, 2009
and received by the Senate on May12,2009.
3- Amending TILA Sec 129B, inter alia,by inserting a new subsection aftersubsection (b): Sec 103(4)(A) “No pro-vision of this subsection shall beconstrued as permitting yieldspread premiums or other similarincentive compensation.”
4- Hearing before the Subcommitteeon Housing of the House Committeeon Banking and Currency (1972),
Real Estate Settlement Costs: FHAMortgage Foreclosures, HousingAbandonment, and Site SelectionPolicies.
5- Research Works, Volume 5, Number8, September 2008, pp 1-2.
6- Released: Nov. 12, 2008.7- FR-5180, Filed: 05/08/09.8- Research Works, Op. cit., p.1.9- 24 CFR 3500, Real Estate Settlement
Procedures Act.10- HUD offered a “Two-Part Test,” in its
Statement of Policy 1999-1, to deter-mine if a loan origination is RESPAcompliant: (1) whether services wereactually furnished and actually per-formed for the compensation paid,and (2) whether the compensationpayments are reasonably related tothe value of the services actually fur-nished and performed. See: 24 CFRPart 3500 (RESPA), Statement of Policy1999-1, US Department of HUD,02/22/99.
11-54 FR 38646 (September 20, 1989),final rule in Deregulation ofMortgagor Income Requirements;HUD’s recognition in 1992 that theYSP must be disclosed, codified in“Fact Situations” 5 and 13 inAppendix B to 24 CFR Part 3500; seealso, Op. cit. Statement of Policy1999-1.
12-24 CFR Part 3500 (RESPA) Statementof Policy 2001-1, Section I.A.
13- Ibid.14-24 CFR 3500.14 (g)(1)(iv), permits “a
payment to any person of a bonafide salary or compensation or otherpayment for goods or facilities actu-ally furnished or for services actual-ly performed.”
15-Mentecki v. Saxon Mortgage, Inc.,1997 WL 45088 (E.D. Va. 1997).
16-Barbosa v. Target MortgageCorporation, 968 F.Supp. 1548 (S.D.Fla. 1997).
17-Culpepper v. Inland MortgageCorporation, 953 F.Supp. 367 (N.D.Ala. 1997).
18-Culpepper v. Inland MortgageCorporation, 132 F.3d 692 (11th Cir.1998).
19-HUD Policy Statement, 64 FR 10080,10084, Op. cit., Note 10.
20-Op. cit., Note 10, Statement of Policy1999-1, Section II.C.
21-Op. cit., Note 12, Statement of Policy2001-1.
22-Culpepper v. Irwin Mortgage Corporation,253 F.3d 1324 (11th Cir. 2001).
23-Codified at 62 FR 53912.24-Op. cit., Note 10, Statement of Policy
1999-1, Section F. This qualified“safe harbor” would only be avail-able to those payments that did notexceed a test to preclude “unreason-able fees.” The test was to be estab-lished in the rule-making.
25-24 CFR Parts 203 and 3500, FR: Vol. 73,No. 222, pp. 68204-68288 (11/17/08).
26-Op.cit., Note 10, Statement of Policy1999-1, “Two-Part Test.”
news flash continued from page 20
of a broad spectrum of lenders fromcoast to coast. Half of our clients haveless than $500 million in assets, buthalf of them have more. We’re alsopleased to be able to serve about 40 ofAmerica’s top 100 banking institutions,and nearly half of the country’s top 100credit unions.”
According to Happ, Benchmarks2009 presents useful insights into therealm of consumer-direct, Web-basedmortgage lending—insights that canhelp banks and credit unions sharpenthe focus and direction of their lendingbusinesses.For more information, visit www.mort-gagebot.com.
HUD offers $58 millionfor housing counseling
The U.S. Departmentof Housing and UrbanDevelopment (HUD)has announced that
more than $58 million is available for abroad range of housing counseling pro-grams to help families find and pre-serve housing. The funding is anincrease of $11 million, or 23 percent,over last year. These grants will beawarded competitively to hundreds ofHUD-approved counseling agencies andstate Housing Finance Agencies thatoffer a variety of services, includinghow to purchase or rent a home, howto avoid foreclosure, how to improvecredit scores, and how to qualify for areverse mortgage.
“Now, more than ever, it is crucialthat American families make informeddecisions about their housing choices,”said HUD Secretary Shaun Donovan.“These counseling agencies are alsovital to the success of the President’sMaking Home Affordable Plan which ishelping families avoid foreclosure andremain in their homes.”
HUD-approved counseling agenciesprovide homeownership counseling, aswell as financial literacy education torenters and homeless individuals and
families. This year, HUD’s HousingCounseling Grant program will provideapproximately $47 million for compre-hensive counseling; $8 million forReverse Mortgage Counseling, $2 mil-lion for supplemental funding for LoanDocument Review Counseling, and $1million in supplemental funding forFair Lending and Mortgage FraudAnalysis and Counseling.
National and regional agencies dis-tribute much of HUD’s housing counsel-ing grant funding to community-basedgrassroots organizations that provideadvice and guidance to low- and mod-erate-income families seeking toimprove their housing conditions. Inaddition, these larger organizationshelp improve the quality of housingcounseling services and enhance coor-dination among their counselingproviders.
HUD will award grants to approxi-mately 400 applicants. Applicationsmay be downloaded from HUD’s Website, including instructions on submit-ting proposals via FedEx, United ParcelService, and the U.S. Postal Service.Applications must be postmarked on orbefore Friday, July 17 and received bythe designated reviewing office withinfive days. For more information, visit www.hud.gov.
Your turnNational Mortgage ProfessionalMagazine invites you to submit anyinformation on regulatory changes, leg-islative updates, human interest storiesor any other newsworthy items pertain-ing to the mortgage industry to theattention of:
NMP News Flash columnPhone #: (516) 409-5555
E-mail: [email protected]
Note: Submissions sent via e-mail arepreferred. The deadline for submissions isthe 1st of the month prior to the targetissue.
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Need Clarity on FHA’s Allowance ofthe First-Time Homebuyer Tax Credit?If you are, you are definitely not alone.This Federal Housing Administration(FHA) update is from Mortgagee Letter2009-15, which establishes the guide-lines for the use of first-time homebuy-er tax credit as settlement funds.
Since this update was released, Ihave been getting e-mails from loanofficers (LOs) across the country askingfor clarity on how the program works.The fact is that these updates can beconfusing if you are not proficient withFHA guides, as each of these updatespresumes you have a good workingknowledge of the guides and eachupdate builds on that previous workingknowledge. I hope to clarify how theFirst-Time Homebuyer Tax Credit(FTHBTC) works with FHA, and to giveyou the information you need to be aninformed mortgage professional.
The easiest way to understand thesenew guides is to look at them as twoseparate programs and two separateways FHA allows use of the FTHBTC forsettlement funds. The first is when theamount of the tax credit is advanced tothe buyer in the form of a second lien,and the second is when the tax credit ispurchased from the buyer in the formof an unsecured loan. To restate: Oneway is an advance with a lien and theother is a purchase of the tax credit asa loan. Now I will explain in more detaileach of these two programs.
Method 1: The advanceof the tax credit with asecond lien1. The IRS tax credit refund can be madeonly to the taxpayer and not a thirdparty. Meaning the tax payer will get therefund and just repay the second lineaccording to the terms of the lien.
2. The entity offering the tax credit advancewith second liens can be a federal, state orlocal government office or an FHA-approved non-profit (HUD 4155.1 5.C).
3. The buyer cannot get cash backthrough the tax credit advance. Thatis, if the TC is $8,000, but the buyeronly needs $5,000 to close, the agencycannot give them back the $3,000 dif-ference.
4. The second lien may not exceed thedownpayment, closing costs and prepaidexpenses. Please note that with the sec-ond lien method, they can use thesefunds for the 3.5 percent downpaymentand the advance can exceed the taxcredit amount. According to FHA Guides,the agency giving the second lien is ableto offer the full amount of acquisitioncosts (4155.1 5.C.3.c). For example, if thebuyer’s downpayment plus closing costsplus prepaids equals $10,000, and thetax credit is for only $8,000, the secondlien cannot exceed $10,000.
5. The second lien may be “soft” orrequire payments. Many governmentagencies already offer soft seconds thatare either forgiven after a certain periodof time or payable when the home sells.Some agencies do require payments.With the American Recovery andReinvestment Act (ARRA) funds, manycounty and city agencies have been allot-ted money for these types of programs,which really benefit the borrowers. Ilearned about a program in the state ofMichigan that offers up to 50 percenttoward a FTHB purchase. Learning aboutand understanding how these programswork can help you stand out with yourmarketing, so contact your governmentoffices and research these programs!
6. Payments on second liens must beincluded in ratios unless deferred for atleast 36 months. You will need to findout the terms of the loan. If you findthat the payment is deferred for at least36 months, you don’t have to includethe payments in the ratios.
7. Balloon payments on second liensmay not become due before 10 years.
Method 2: The purchaseof the tax creditFHA-approved mortgagees and FHAapproved non-profits may purchase thetax credit.
The tax credit purchaser may notcharge more than 2.5 percent of the taxcredit as a fee. The mortgagee or non-profit is allowed to charge a fee for theservice they are providing, and that feecannot be more than 2.5 percent of the
tax credit amount. For example, if thetax credit is $8,000, the fee the buyer ischarged cannot exceed $200. This is nota hard and fast rule, and the letterstates that it’s only “FHA’s view” that thefees not exceed 2.5 percent of the taxcredit amount.
The IRS may deduct from the tax cred-it: Unpaid student loans, tax liens andgarnishments. Therefore, lenders andagencies are cautioned to do their duediligence in researching whether the bor-rower has any other credit obligationswhich would offset the tax credit amount.
The proceeds of the sale of the taxcredit can be used for closing costs, pre-paids and additional downpaymentabove the 3.5 percent. Please note thatwith the Tax Credit Purchase method,the buyer cannot use these funds forthe 3.5 percent downpayment.
If you’re an FHA lender that has ade-quate resources and are able to quicklyimplement new programs, takingadvantage of this change could helpboost your purchase volume. This pro-gram could form the foundation of yourhomebuyer marketing for the rest ofthe year. You only have until Dec. 1,
which is when the program ends, sotake action now.
I suggest going to city administratorsand informing them about this pro-gram. Cities throughout the countryhave been allotted millions through theARRA funds to help them create home-ownership. This could be a way you canhelp them make those funds go farther,which is music to any city administra-tor’s ears. Position yourself as an FHAexpert and offer to do a communityseminar about this program.
Go FHA!
Jeff Mifsud founded Southfield, Mich.-based Mortgage Seminars LLC in 2004,has been an FHA originator for 12 years,is a contributor to LoanToolbox.com andis a former FHA underwriter. Jeff may bereached at (877) 342-9100 or [email protected].
Visit author Jeff Mifsud’sWeb site at http://msemi-nars.com for tips and infor-
mation on FHA loans anddetails from some of the nation’s topFHA specialists.
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By David Lykken
Many executives today who occupy the“C” Suite are pondering questions relat-ed to the future of the wholesale pro-duction channel. They are asking them-selves and their fellow C-level execu-tives questions like:
� What on earth has happened towholesale?
� What forces are working againstwholesale?
� Who’s left?� Is wholesale going to survive?� What is the future of wholesale?� As a wholesale C-level executive, how
best should I position my company’sbusiness strategy to not just survivebut prosper on these changes?
The later question is the primaryfocus of this article, but we first need tounderstand the problems currently fac-ing the wholesale channel.
It doesn’t matter which side of thewholesale channel you are on … the origi-nating broker or the mortgage bankerfunding the loans … these questions are inthe forefront of everyone’s mind of anyoneremotely associated with wholesale. This isespecially the case if you are one of themany who have been (or were) regularlychecking the now infamous Web site, theImplode-O-Meter (http://ml-implode.com).For the last two plus years, this site haschronicled the demise, one-by-one, of themultiple hundreds of wholesalers whohave either exited the wholesale channelor completely gone out of business. Neverin the history of the industry have we wit-nessed such a mass exodus (or implosion)of participants from such vibrant sectors ofour industry.
Forces working againstwholesaleAnd it isn’t like the forces working againstthe wholesale business channel haveabated at all. There are credible reports ofliterally thousands of bills working theirway through the legislatures of almostevery state in the union that have will
have a significantly negative and onerousaffect on our industry. There is a determi-nation behind each of these bills to bringunder control what is perceived as agreedy out-of-control mortgage industry.For those who feel that regulation is theend-all-be-all “cure” for what has “ailed”our supposedly “sick” industry, they arebrewing up a concoction of “medicine”that will do more to kill than to heal whatis wrong with our industry.Well-intentioned regula-tors who do not under-stand our industry, nor thecomplexities or the prob-lems we faced in this lastbusiness cycle, are themost ill-equipped body ofindividuals to be crafting a“fix” to a system thatadmittedly has flaws. Thereal problem here is thatwe, as an industry, havelacked the will or desire toself-regulate, and now,whether we like it or not,are going to face anonslaught of regulationlike we have never seenbefore. And interestinglyenough, it will have thegreatest negative impacton the wholesale origina-tion channel. Is there abetter example of a mis-guided, albeit well-intended, regulationthan the Home Valuation Code ofConduct (HVCC)? I cannot think of one sin-gle piece of regulation that has donemore to kill a greater number of realestate transactions than the HVCC. And itcomes at a time when our economy des-perately needs every real estate transac-tion possible to fund in order to helprekindle an otherwise stalled real estateeconomy and world economy. Unless wespeak out with a loud voice, more of thesame is on its way … and once again, thegreatest impact will be on the wholesalechannel. But, your voice can make a dif-ference as we have witnessed by HR 3044,which if passed, will put an 18-monthmoratorium on the HVCC until it can be
reconstructed to better accomplish whatit set out to achieve.
Beyond the regulatory conundrum weface as an industry, there are internal forcesfurther eroding the number of wholesaleparticipants. We have witnessed an increas-ingly uneven “playing field” between the“haves” and the “have not’s.” By that, Imean those mortgage banking companiesthat have sufficient net worth and liquidityto be able to sell loans on a “mandatorybasis” have a significant pricing advantageover those more thinly capitalized smallercompanies that are forced to sell loans onthe “best efforts” basis. Those selling on a“mandatory basis” are realizing anywherefrom a full point to a point and three-quar-
ters bottom line gain overthose selling on just a “besteffort” basis. When a groupof companies, in this casethe better-capitalized com-panies, are able to realizethe pre-tax difference of afull point or more over theirmore thinly capitalizedcounterparts, the bettercapitalized companies aregoing to be able to offer bet-ter pricing, while at thesame time, maintaingreater profitability. Andwhen this happens in thealmost-always-competitive“dog-eat-dog” wholesalemarket, only the strongest(better capitalized) compa-nies will survive, thus caus-ing a further thinning of thewholesale ranks.
Several years ago, veryfew knew what a ware-
house line of credit was. It was only thosewho owned their own independent mort-gage banking company or those whowanted to become a mortgage bankerknew and understood the importance of awarehouse line. In fact, in this last businesscycle there was such a seemingly endlessabundance of credit and warehouse lineproviders that we, as an industry, took forgranted this critical segment of our indus-try. Few understood that warehouse-linesof credit were the very “heart pump” ofthe independent mortgage banking indus-try … that is until we as an industry expe-rienced a life-threatening cardiac arrest.This brings me to the last couple of majorforces working against the wholesale chan-nel: an ever shrinking number of ware-
“The real problemhere is that we, as anindustry, have lackedthe will or desire to
self-regulate, and now,whether we like it ornot, are going to facean onslaught of regu-
lation like we havenever seen before.”
Questions About the Future ofWholesale Are Growing
house lenders for the whole industry, andeven greater shortage of warehouselenders willing to fund loans for independ-ent wholesale mortgage bankers. If ware-house lenders are willing to do so, they arefrequently requiring much higher capital-ization to offset the perceived risk. This iscompounded by a decreasing number ofinvestors willing to buy third-party-origi-nated (TPO) product … another name forwholesale lending. The days of thinly-cap-italized independent mortgage bankersdoing TPO business are pretty much over… at least for this next business cycle.
So, on the surface, it looks bleak for thewholesale originations. Gone are manylarge and small wholesalers that servicedtens of thousands of mortgage brokersacross the country. Gone are thousandsupon thousands of independent mort-gage brokerage companies. Gone arethousands of folks from our industry.
So, what is going on inthe heads of the C-levelexecutives? As a result of all these changes, we areseeing two ‘camps’ forming …
Group #1: Those that only see gloomand doom.But, there’s another group …Group #2: Those that see an amazingabundant number of opportunities as aresult of all the calamity and carnagethat has taken place in the market place.
In spite of all the obstacles, chal-lenges, shortages of credit, etc, those inthe second group also see a huge “void ofcapacity” in our industry and know thatsomeone, somehow, someway are goingto figure it out and have unprecedentedopportunity in this next market cycle.
As a regular guest on TV being inter-viewed about these issues related to ourindustry, and as the result of having myown radio program and being a businessconsultant, I am being continually askedall the questions I am discussing in thisarticle. Having taken my fair share of salestraining classes, I always try to answerevery question with a question. I askeveryone these three very basic (rhetori-cal) questions:
� Do you believe that the Americandream of homeownership is aliveand well today?
� Do you believe that it will take a
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housing recovery to lead this nationout of this recession?
� Do you believe that Americans arecoming to a place where they are nolonger going to need mortgage loansto finance their American dream?
Granted, “The Dream” of homeown-ership may have had some recent night-mares, but “The Dream” is still verymuch alive! Without question, housingis critical to our economy and particu-larly will assist in a recovery from thisrecession. And there’s little doubt thatAmericans are in more need of mort-gage financing than ever before.
So if you are one of those that gravi-tate to Group #2 that is good. But, beforeyou start charging off to exploit the manyopportunities that are undoubtedly outthere, I would merely offer you this wordof advice … If you go about your busi-ness in this new business cycle accordingto what worked in the last business cycle,you too will fail. However, if you are wiseand get the right counsel, you will haveone of the most amazing opportunitiesthis market has ever presented anygroup of professionals.
I have said this before and will say itagain: I predict more wealth will be creat-ed more quickly in this next business cyclethan at anytime in history. Without tryingto sound like some late night TV infomer-cial pushing some get-rich-quick scheme,I can assure you that there are moreopportunities today than ever before.
Brokers who will surviveThere’s little question that many brokersand loan originators have left the industryor have been forced to take jobs withbanks, bigger companies or net branches,but they are still out there and theyhaven’t lost their desire to operate inde-pendently. Even those who left the indus-try want to come back. Why? Becausethere’s something infectious about thisbusiness! There’s something so rewardingabout helping someone as a loan origina-tor to achieve the American dream andmake a decent living along the way. This isa relationship-driven business. Yes, pricingand programs are important, but at theend of the day, it’s all about relationships.Have you ever wondered why in the lastbusiness cycle, 68 percent of all origina-tions were captured by the mortgage bro-kerage community? It’s because mortgagebrokers did an excellent job of establishingrelationships with consumers and provid-ing them options that other big companiescould not provide. So, the answer to thequestion, “Will the broker survive?” … theanswer is “yes,” in a way. But the “how?”and “in what form?” is the bigger question.Therein resides one of the bigger opportu-nities. Successfully connecting (or recon-necting) with these displaced groups of
originators will be the key. It’s probably aforegone conclusion that in this next busi-ness cycle, there are going to be far fewermortgage brokers in business functioningas originators. It is near as I can determine,regrettably, only about 15 percent of theoriginal population of mortgage brokerswill survive. But that’s not to say that thereis no future for the independent origina-tors and that again is where the opportu-nity is. There isn’t sufficient amount ofspace in this article to further expoundupon this point … maybe in future arti-cles. Write me and let me know.
The brokers who do survive will haveto learn to live in an increasingly moreregulated environment with real penaltiesand will have to learn to operate earninglower fees. As the old saying goes, “Whatwe lose in fee income, we’ll make it up involume.” We have a client in midtownManhattan who makes a very good livingoperating on one percent origination feesand minimum yield spread premiums(YSPs). This individual has always operat-ed as a low cost originator and has discov-ered ways to make a very good income bydoing a higher volume of loans.
Wholesalers that will surviveThose wholesalers that will survive mov-ing forward are going to have to be adapt-able. Here’s what I mean. They are goingto have to adapt to numerous new regu-lations coming forth. They cannot beignored or you will be put out of business.Another way a successful wholesaler isgoing to survive is to become adaptablein ways in which they sell loans into thesecondary markets. For example, theymust adapt to selling loans on a “manda-tory” basis. Without question, it is goingto be very difficult for anyone to success-fully operate a wholesale business if theyare selling loans into the secondary mar-kets on the “best efforts” basis … at leastas long as there exists the significantspreads between “mandatory” and “bestefforts” pricing. Those selling on a“mandatory” basis will have such a signif-icant pricing advantage over those don’tto the point that it will be nearly impossi-ble to compete. The only exception willbe if a wholesaler is able to achieve someunique product or market niche and pro-vide over-the-top service.
Another key factor necessary for theindependent mortgage banker to surviveas a wholesaler is the ability to sell direct-ly to Fannie Mae, Freddie Mac and GinnieMae. With the new higher capital require-ments, wholesalers are going to have toraise additional capital to compete.
Warehouse lines of credit will remainan issue for the foreseeable future, andthat the key to funding more volume willbe the rate at which a mortgage bankercan turn their warehouse line. However,
we are seeing growing signs that ware-housing will be more available in thefuture. With credit facilities currently beingconsidered by Fannie Mae, Freddie Macand Ginnie Mae, there is hope that the cur-rent warehousing shortage will beaddressed. I’m encouraged by recentreports that the U.S. Treasury and theObama Administration are aware of theproblem and they are taking action.
Alternatives to bothAgain, it is my opinion that there willalways be a place for some number ofwholesalers and mortgage brokers.However, if market conditions arerequiring you to look at other alterna-tives, might I suggest the following:
� For originators, find a legitimateHUD-compliant net branch opera-tion and become part of it.
� For wholesalers, consider starting anemerging broker-to-banker programwhereby you convert your currentwholesale business relationships tomake correspondents. There’s a wayof doing this to create a substantialcapital base.
� Consider raising the necessary capi-tal to become a well-capitalizedmortgage banking company … it ispossible.
� Do not accept the lie that there’s nocapital willing to invest in your busi-ness. Forbes has estimated that thereare billions of dollars in cash lookingfor a good investment. Find someonewho can help you develop a well-thought out business plan, includinga solid financial forecast, and thenyou can pursue your dreams offinancing the American dream.
David Lykken is president, mortgagestrategies and managing partner withMortgage Banking Solutions. David hasmore than 34 years of industry experi-ence and has garnered a national repu-tation. David has become a frequentguest on FOX Business News with NeilCavuto, Stuart Varney, Liz Claman andDave Asman with additional guestappearances on the CBS Evening News,Bloomberg TV and radio. He may bereached by phone at (512) 977-9900, ext.101 or e-mail [email protected].
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By Joe Adamaitis
While I am a mortgage banker and havebeen on both sides of the fence the past29-plus years, it pains me to think whatmay happen if mortgage brokers areshut out of the lending business.
In recent weeks, there has been a num-ber of articles and bulletins through indus-try publications, as well as the largermedia circles, hinting that the era of“mortgage brokers” may becoming to an end. Withouta doubt, there will be peo-ple who will use this smallamount of information tosay, “Hooray … can’t wait… don’t let the door hityou in the … etc., etc.” Iwould suggest to these peo-ple that they withhold theirglee until they understandthe true impact that theloss of brokers would haveon the industry and bor-rowers in general.
I’m not here to explainmy version of what wentwrong and who did what,but I would ask people toconsider that while therewere obviously those whodid not belong in themortgage industry, therewere many more who outnumberedthem who did belong.
Many of these people are familiarfaces in our communities who never hada problem with asking borrowers for apaystub or bank statement to prove theycould repay a loan. They understood riskand they understood their responsibili-ties. These were friends and families who,just like you and I, had a job to do andbut for a few did it professionally andwith integrity. These were the peoplemany of you sought out to find a betterdeal. Lower rates or lower fees in somecases, or they were able to be more cre-ative to help those who needed to go out-side the box. These are not the peoplewho caused today’s doom and gloomand/or who took advantage. These peo-ple simply followed the guidelines issuedto them by the lenders and hedge fundswho figured there was no need for thatpaystub or bank statement.
The question going forward is, “Atwhat price will homebuyers pay to sim-ply purchase a home or refinance oncethe brokers and the competition theyprovide are gone?” In my opinion, it
will be plenty. Competition will be lim-ited to only a few large players compris-ing of mostly banks. While this may notbe all bad, one will need to considerwhich bank to do business with. Afterall, some of the banks or companiesstill standing are the same participantswho helped create the problem loanswe hear and read about on a dailybasis. In addition, the question remainsunanswered as to which banks will be
owned by the govern-ment, and if they are,how will that enhancetheir services and costs ifat all?
Consumers will alsolose that personal touch asbrokers thrive on returnbusiness and referrals.Brokers usually can offer abetter deal because oflower overhead, and as aborrower, you won’t be anumber, but a true client.While banks can andshould provide the sameservice, it is nearly impos-sible due to the sheer vol-ume they receive. Further,they simply cannot com-pete with the entrepre-neurial spirit that mostbrokers possess.
In closing, yes, I am a mortgagebanker and proud to be one; however, Ibelieve in Democracy, free speech andthe spirit of the entrepreneur that sepa-rates us from all other countries. Rightabout now, I’m hoping that we do notlose sight of this by using this crisis as anexcuse to end an era of business that isabsolutely necessary. Good brokers pro-vide a useful and necessary service tomany Americans, and even as a banker, Iwould not want to see that be taken awayfrom anyone, especially due to certainpolitical and financial aspirations.
I would ask that before those whohave the authority make this decisionfinal, to please consider the need forcompetition and the individualizedservices that brokers bring to the table.I caution against a hasty decision andwould hope that this hint of endingloans taken by mortgage brokers isreconsidered by all.
Joe Adamaitis is a senior loan consultantwith Wells Fargo. He may be reached byphone at (603) 817-6543 or [email protected].
“At what price willhomebuyers pay tosimply purchase ahome or refinance
once the brokers andthe competition theyprovide are gone? Inmy opinion, it will
be plenty.”
Shutting Out Mortgage Brokers …be Careful What You Wish for!
By Gilbert Frank
When I was asked to do an article on thefuture of mortgage brokers, I thought thatwith 25 years in the business, I could do itoff the top of my head. But just in case,maybe I should make a few calls. So, I start-ed calling my broker clients and theresponses I received ranged from the sky isfalling to it has never been better. I thoughtthis is not unusual, some people always seethe glass half full others half empty. I decid-ed to dig a little deeper and contacted myfiends throughout all aspects of the mort-gage business to get their thoughts. Here iswhat they had to say.
First thing out of everyone’s mouthwas the Home Valuation Code ofConduct (HVCC) and what a colossalmess it is. Appraisal costs have risenand values are a big problem. The qual-ity of appraisals has worsened, mostlybecause the most experienced apprais-ers don’t want to work for an appraisalmanagement company (AMC) becauseof the low pay. Many of the AMCs arenational companies and their apprais-ers don’t have local experience, so theappraisals tend to be very conservative.Because the appraisals, in most cases,are not assignable, it makes it harder toshop loans and creates the need toorder a new appraisal if the loanturned down. With all that said, whenpush comes to shove, many brokers tellme it’s not that big a deal In fact, it hassome positive effects. Not being able toshop the loan around once it is submit-ted increases the pull-through rate forthe wholesale lender, which is a goodthing because we need them to stay inbusiness! Most of these problems arelogistical and should work themselvesout over the next few months and is nomore difficult than in the past whenlenders had their own list of approvedappraisers we had to use.
On a side note, the president of theNational Association of Realtors (NAR)was in New York recently to meet withNew York State Attorney GeneralAndrew Cuomo and his staff whoworked directly on the HVCC, to sharethe concerns of his membership, andask for their assistance in resolvingproblems related to the HVCC. He alsotraveled to Washington, D.C. to meetwith the Director of the FederalHousing Finance Agency, James B.Lockhart, to discuss ways they can workwith Fannie Mae, Freddie Mac andlenders to ensure that appraisals are
accurate. We need to support NAR andall trade associations in their legislativeefforts on this issue.
So, if appraisals are not the real issuewhat is? The overwhelming response wascompetition from big banks and pendinglegislation.
Let’s tackle big banks first (we won’tname them but come on … we know whothey are). The big banks offer better ratesthrough retail than the wholesale market,and therefore, brokers have a more diffi-cult time competing. Their underwriting iseasier on retail and they won’t offer com-petitive jumbo programs to brokers. Okay,so really what is new? Banks have alwaysoffered special terms to their good cus-tomers, especially ones with largedeposits. Go back 25 years and there wasno secondary market for jumbo loans.Right now, VA/FHA and conforming loansare the broker’s most competitive pro-grams, so we need to focus on them. Bigbanks will come back into the marketwhen there is new competition for jumboloans. My best guess is sometime nextyear.
Now, let’s get to the meat and pota-toes, upcoming legislation for our indus-try. This is of course the massive “pointthe finger campaign” that hopes to pin allthe ills of the mortgage industry on third-party originations … mortgage brokers.Of course, this is not true, but big banksand Wall Street have more powerful andinfluential lobby groups than we do andthat is how they spin it. The FederalReserve policy that goes into effect theend of July deals with what fees the bro-ker can collect prior to the borrowerreceiving a Regulation Z disclosure fromthe lender. This will impact the mortgagebroker more than the mortgage bankerwho is the lender and can provide theRegulation Z. This policy is, of course, fullof interpretation, and I am not the legalexpert to advise the industry, so I wouldsay everyone needs to read up on thisand get a more thorough understandingof the situation. Still, this is not a dealkiller, just another hurdle to jump.
The Future for Mortgage BrokersBack to square one?
“So, now we are back to squareone in the industry. The mortgagebrokers had, for a long time, built
up an overwhelming advantagewith the wholesaler lenders andnow it has turned around 180
degrees in favor of the wholesaler.”
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HR 1728 has passed the House andis on its way to the Senate. This billhas many complicated factors, buttwo aspects of importance are:Stated-income loans and regulationon what fees we can charge. We arenot doing many stated-income loanscurrently, so this is not a big issue,but the fees issue is a different mat-ter. As of the time of this writing, thebill has not passed, so I urge you tocontact your legislators and theNational Association of MortgageBrokers to fight this purposed bill.
Tracy Kelly of Kelly Mortgagesummed it up this way:“We are throwing the baby out withthe bath water. To blame all the indus-try’s woes on the broker is just notright. In every industry, there are com-petent people and incompetent people.I know that I have taken more contin-uing educations classes by virtue ofbeing approved in many states thanthe average loan officer at any largebank. It seems that I am always takinga class to keep my licenses active. Toinsinuate that all brokers are not edu-cated or ethical is just an incorrectstatement. I have fought too hard toget to where I am today, and I will notleave without a fight. I am in this forthe long haul!”
We need more people like Tracy!So, now we are back to square one in
the industry. The mortgage brokershad, for a long time, built up an over-whelming advantage with the whole-saler lenders and now it has turnedaround 180 degrees in favor of thewholesaler. Brokers are no longer ableto submit files to multiple lenders andthen play the market for the lower ratesand bigger rebates. Lenders are nolonger under pressure to approve mar-ginal loans that are poorly processedjust to save a perceived broker relation-ship. Now, the broker must submitquality loans that are well-processedand delivered in a timely fashion. Thegood news is that wholesale lenders areenjoying better margins than in anytime in recent history. Wholesalersmaking a profit is good news because itwill encourage more lenders to comeback into the wholesale market. Thebig banks are making money on theirnew loan originations, yet they won’tbe able to handle the industry volumethrough their retail outlets. The mort-gage broker is an intricate part of themortgage industry. If the big banksdon’t expand wholesale lending, then
regional banks will pick up the slack. Ihave recently been contacted bylenders looking to get back into themarket, and I have also heard aboutWall Street looking to get back intomortgage backed securities, and whynot. Housing prices don’t look to gomuch lower, and sanity has returned tounderwriting and program guidelines.There is money to be made in mort-gages, and I never underestimate thegreed factor in business. If there areprofits, they will come and they willneed mortgage brokers to maximizethem.
The battle for the mortgage broker canbe compared to stepping into the ringwith Mike Tyson. Mike won most of hisfights before they even started. His oppo-nents were so intimidated that Tysonoften knocked them out in the first round.As a boxing historian, I will tell you thatthe longer the fight went on, the moresuccessful the opponents were. We havetaken some vicious blows, but we havenot been knocked out! At the same time,we are not out to the woods by any stretchof the imagination, but as Dennis Reese, along-time veteran of the mortgage indus-try said to me this week, “It is in a periodof huge chaos and change that the oppor-tunity to form great companies is born.This should be looked on as an opportuni-ty, not a doomsday event.” I like that.Moreover, it may be a good time for somesmall mortgage brokers to consolidate. Ikeep hearing that wholesale lenders arecutting off brokers for lack of volume, andthat would be one reason to join forces.Volume is always a great negotiating tool.
Todd Shillington of Amerifund LendingGroup is a large mortgage broker who hasbeen very successful for many years. Iasked him for his plan to survive the cur-rent environment this is what he said:“In order to survive, you need very goodprocessing. The lenders won’t accept poor-ly-processed loans and it just creates moretime delays. The education of loan officersis critical. We have weekly Webinars to keepour people up to date. We offer a very com-petitive commission split model with ourloan officers who mostly work out of theirhomes. This helps keep our costs down sowe can use our resources more effectively.Again, the strong will survive, but there ismore consolidation to come. We need to belean and aggressive to survive.”
Sounds like good advice to me.
Gilbert Frank has spent the last 25 years inwholesale and retail lending. He may bereached by e-mail at [email protected].
Tommy … what will the Consumer Financial Protection Agency (CFPA) do to themortgage professional?
The Obama Administration recently released its 88-page summary of the FinancialRegulatory Reform proposal, and it appears brokers or mortgagees will be requiredto up their professionalism in the mortgage industry as a mortgage banker. Someof the key points that affect brokers are:
� CFPA require originators or securitizers to retain an interest in the credit risk ofloans transferred in securities to private investors.
� Authorizes new requirements for originator compensation that would disbursecommissions over time based on loan performance.
� The establishment of appropriate duties of care applying to financial interme-diaries serving consumers, including a new “duty of best execution” for mortgagebrokers.
This means that the broker/mortgagee may be required to have five percent interestin the performance of a loan after funding. If the loan goes into default, regardless of thecause, the broker may have fiduciary responsibility as a result. The broker/mortgagee isnow in the mortgage insurance business and now held accountable.
Your yield spread premium will no longer be paid with other commissions. Youwill receive residual income over the life of the loan. And, this new agency will en-force accountability by ensuring banks, non-banks and independent mortgage bro-kers play by the same rules. It will be interesting to see who establishes the rulesand which rules will be selected. Which rules will no longer apply?
Regardless, what the outcome of CFPA will have on the mortgage professional,one thing is clear. There will be more changes to compliance. Quality MortgageServices (QMS) can provide full-service mortgage compliance. If the mortgage pro-fessionals are required to start performing in the mortgage banking world by se-curitizing or insuring loans, the mortgage professional will need to have riskanalysis compliance performed on the loans.
Now, the minimum is 10 percent. However, if the mortgage professional is re-quired to securitize or insure a loan, a larger sampling will be required. I often seewhere QMS performs 10 percent sampling of post-closing quality control (QC) andthe mortgagee gets hit by the U.S. Department of Housing and Urban Development(HUD) on defaulted loans. In most cases, the loans that were hit by HUD were notquality controlled. The mortgagee, as a result, is forced to perform more than 10percent QC because of the defaults. If the mortgagee had performed a larger selec-tion for QC, the probability is the loans could have been assessed for risk and ad-dressed properly.
When HUD challenges the loans of a mortgagee, the mortgage professional is in re-action mode rather than in pro-active mode. Now that the Obama Administration isreforming the mortgage industry one can expect that the “broker/originator” will haveskin in the game if one wants to play. The mindset will no longer be “one more loan,”it will be “one more quality loan.” The loan will have a legacy and it will follow the bro-ker/originator for the loan’s full term. This is why the mortgage professional will haveQC or more QC so that the mortgage professional will not have to pay for it later on.
By Tommy A. Duncan
Sponsored by
Tommy A. Duncan is executive vice president of Quality Mortgage Services LLC.For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528, ext. 124 or e-mail [email protected]. You may also visit QualityMortgage Services LLC on the Web at www.qualitymortgageservices.com.
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Who’s Left in WholesaleCompany/Web Site/Phone Products Offered States/Regions About the Company
Capital DevelopmentCapitalDev.com(866) 456-2402
Capital Development specializes in Conventional and SBAfinancing with competitive wholesale commercial mortgage rates.
Multi-Use, Special-Use, Hospitality,Multi-Family Loans, Conventional, SBA504, SBA 7a, USDA B&I, Hard Money
Nationwide
Assurity Financial Services, LLChttp://www.assuritywholesale.com(866) 844-7390
A mid-sized lender that is well positioned for success as aresponsible steward of the lending community it serves.
Conf Fixed, Terms: 40,30,25,20,15,10;Conf ARM, Terms: 3/1,5/1,7/1; GovFixed, Terms: 30,25,20,15; Gov ARM,Terms: 1/1,3/1,5/
AK, AZ, CA (only DRECRML types), CO, CT, FL,GA, ID, IL, IN, KY, MD,MI, MN, MO, NC, NV,NM, OH, OK, OR, SC,TN, TX, UT, VA, WY
Commercial Finance USAwww.commercialfinanceusa.com925 837-7752
Wholesale lending, established 2003. Institutional and privatefunds. Low rates, fast close. User friendly for agents notexperienced in commercial. Plenty of money. Creative & flexibleunderwriting.
Purchase, refinance, rehab and constructionof any type of commercial, mixed use,recreational, or religious property. Landacquisition and development. Discountedmortgage notes and REOs.
North and CentralAmerica
Emigrant Funding Corporationwww.EmigrantFunding.com1-800-EMIGRANT ext: “FUNDING”
EFC is a portfolio lender providing Commercial Financing. Nominimum FICO requirement. Brokers protected/Premiums paid.
Full Doc & Low Doc Programs $100Kup to $5MM, No Doc Program $100Kup to $1MM, Properties: Multifamily,Mixed Use, Retail/Office
New York, New Jersey,Connecticut,Massachusetts, NewHampshire, Rhode Island,Pennsylvania and Florida.
First California Bankwww.fcbank.com818-638-5886
FCB has been serving Southern California for over 30 years as a well-capitalized and stable commercial bank and lender.
FCB offers loan products up to $4M withcompetitive rates/terms, low appraisalcosts, and common-sense underwriting.
Southern California
Freedom Capital, LLCwww.FreedomCapital.biz480-346-7448
Bank-Based Financing up to 90% LTV (Own.Occ.Purchase) and up to60% LTV (ALL Refi’s and N.O.O. Purchase) for Most CommercialProperties. NO Multi-Family, NO Gas Stations, NO Churches.
Commercial 1st Lien Mortgages forCommercially Zoned andCommercially Used Properties Only.YSP and Protected Fees for Brokers.
ALL 50 United States
Mercury Capitalwww.mercurycapital.com212-661-8700
Mercury Capital specializes in fast and creative solutions forimmediate financing needs.
Short Term Bridge Loans,Hard Money, 1st Mortgages
Nationwide
Sterling Commercial Capitalwww.sterlingcommercialcapital.com800-497-8606
Sterling Commercial Capital is a private commercial real estatemortgage lender, providing competitive short & long term loans
1-2 year bridge loans and 3-10 yearpermanent loans on a wide variety ofproperty types. We also target hard-to-finance transactions.
Nationwide
COMMERCIAL
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Company/Web Site/Phone Products Offered States/Regions About the Company
ACC MortgageWeApproveLoans.com
Since 1999 we have been closing the loans that others can’t. We arethe final decision maker.
ACC Mortgage Lending Philosophy:Benefit, Capacity, Value 70% MAX LTV,Rates from 9.99% No credit scoreminimum NO DOC COMMERCIAL
East Coast
Bank of Ann Arborwww.boaawholesale.com248-336-9140
Bank of Ann Arbor keeps expanding with competitive rates and greatcustomer service. Check us out!
Bank of Ann Arbor offers conformingand FHA Products. We also offer DURefi Plus as well Rural Housing Loans.
Most States exceptCA, FL, NV, AZ, CN
Bismark Mortgage Companywww.bismarkmortgage.com800-350-7199 x103
Bismark Mortgage Company is a private portfolio lender providingfinancing for the construction of residential single-family homes.
We offer two types of short-termresidential construction loans:Owner-Occupied and Non-OwnerOccupied. We also have aConstruction Completion Program.
NATIONWIDE except:AR, SD
CGB Agri Financial Serviceswww.cgb-afs.com877-548-2622
CGB is a national company that originates and services rural home andfull time farm loans.
Rural home; part time farm; bareland. Conforming credit for rural.Loans - 1 yr ARM to 30 yr fixedmonthly pymt 85% LTV
National
Construction Capital Sourcewww.ccsloans.com801-747-7150
CCS is a wholesale lending company that doesn’t market to borrowersand builders. We exist to provide the mortgage broker with the tools toclose more construction loans.
Residential Construction LoansCommercial Construction Loans
Utah and Idaho
Emigrant Mortgage Companywww.EmigrantMortgage.com
EMC is a portfolio lender specializing in niche financing for PrimaryResidences, Investment Properties and Co-ops.
No-Income/No-Asset - Subject tostate laws, Jumbo Loans up to$10MM, Foreign National FinancingAgency (FNMA/FHLMC) Products
New York, New Jersey,Connecticut,Massachusetts, NewHampshire, RhodeIsland, Delaware,Pennsylvania and Florida
Fifth Third Mortgagewww.53.com/wholesalemortgage
Fifth Third Mortgage remains committed to providing you with themortgage products you need to serve your customers and grow yourbusiness. We offer a variety of mortgage solutions, timely service and ahistory of responsible lending that keeps us financially sound andfocused on a brighter future...ours and yours.
We offer a wide variety of mortgagesolutions - from fixed rate to ARMs,conventional to FHA.
AL, AR, CO, DE, FL,GA, ID, IL, IN, IA, KS,KY, LA, MI, MN, MS,MO, MT, NE, NJ, NM,NY, NC, OH, OK, OR,PA, SC, SD, TN, TX, UT,VA, WA, WV, WI, WY
First Source CapitalMortgage, Incwww.ruralhomeloan.com888-484-1256
Innovative Rural financing since 1993. Real estate finance services forall types of rural property, specializing in Texas, New Mexico andOklahoma.
Fixed and ARM rates for land andhome loans, together or separate. AGland loans for production property.Rural Commercial property loans.
Texas, New Mexicoand Oklahoma
Flagstar Wholesale Lendingwholesale.flagstar.com866-945-9872
One of America’s largest wholesale and correspondent mortgagelenders, Flagstar is a leader in paperless technology.
FHA, VA, Conventional, WarehouseLOC, Jumbo, eClosings
Nationwide
Generation MortgageCompanywww.generationmortgage.com1-866-733-6085
Generation Mortgage Company‚TM, is a top-ten, nationwide reversemortgage lender and servicer with experienced team.
FHA-Insured reverse mortgages:adjustable and fixed HECM (HomeEquity Conversion Mortgage) loansfor senior homeowners.
All US states exceptAK, IN, KY, NY, SD,WA.
ING Mortgagewww.ingloans.com866-464-9461
ING Mortgage is the operating name of ING Bank, fsb in the WholesaleLending channel. ING Mortgage is backed by ING, a global financialinstitution.
ING Mortgage is best known for ourJumbo Portfolio 5 and 7/1 ARMS. Welend up to $3,000,000 in all fiftystates on single family primary one-unit properties.
All states
RESIDENTIAL
"Who's Left in Wholesale" Directory is Sponsored by TruClose Financial Services
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Company/Web Site/Phone Products Offered States/Regions About the Company
Luther Burbank SavingsLutherbsavings.com310-220-2040
Luther Burbank Savings specializes in portfolio lending and providesexcellent service to its approved brokers and their customers.
Portfolio lender offering Jumbo andSuper Jumbo home loans in theState of California.
California
Platinum Mortgage, Inc.www.platinumez.com877-50-EZ-Rep
Platinum Mortgage is a southeastern wholesale residential lender withbenchmark rates and unparalleled service. Closing loans has neverbeen EZ’er.
Conventional, FHA/VA Georgia, Tennessee,Alabama, Kentucky,Louisiana,Mississippi, Florida
Primary Capital Mortgagewww.pcmexpress.com1-877-690-1270
Primary Capital is a leading residential mortgage company offeringconventional, FHA, VA and USDA loan products.
Conventional, FHA, VA and USDAloan products offered.
AL, AR, CO, FL, GA,KY, MD, MS, MO, NC,OH, OK, SC, TN, TX,VA
Provident Bank Mortgage -Faster Funded Home Loanswww.pbmwholesale.comNorth CA - (800) 738-0806 orSouth CA (800) 733-3657
Provident Bank Mortgage, a division of Provident Savings Bank, FSBchartered in 1956, has wholesale sales/operation offices in North andSouth California.
Agency conforming and highbalance fixed rate and ARMprograms. Jumbo fixed rate andARM programs, and full FHA/VAproduct line.
California
Security AtlanticFhoak.com866-933-6342
One of the top ten National Wholesale FHA lenders in the country.Great customer service. 24 hr turn time on new files and pre-approvals.
FHA Wholesale Lender Only 36 States
United Mortgage Corp.www.unitedmortgage.com516-570-4116
United Mortgage - Nat’l licensed Mtg. Banker with excellent service &turn around time conveniently located in Hauppauge, NY.
Conforming Fha, ConformingConventional, Jumbo Fha, JumboConventional, Fixed And Non FixedProducts For Both Fha AndConventional
NY, CT, NM, NC, FL,NH, PA, MD, DE, MI,GA, ME, SC, CO, TX,IN, TN, NJ, CA, MO
United Wholesale Mortgagewww.uwmco.com1-800-981-8898
Closing FHA Loans in 5-7 business day! Always 24-48 hours on FHAApprove Eligible loans and Streamlines!
FHA Approve Eligibles andStreamlines Only! Minimum FICO 620
Nationwide exceptAK, CA, DE, HI, NJ,NY, PA, RI, SD, WV
Wells Fargo WholesaleLendingwww.brokersfirst.com
As a leading lender, we are committed to working with brokers toestablish long-term success for the broker industry.
Conforming conventional, FHA/VA,Reverse, Home Equity.
Nationwide
RESIDENTIAL
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gage industry professionals are experi-encing the same lack of adequate andefficient, hands-on representationfrom the professional recruiting /placement industry. Remember thosewho handle you with such indifferencetoday when you need them. Times willchange and they will again need you inthe not too distant future. I am actual-ly restarting my business to takeadvantage of the opportunities createdby this very glaring void.
The background for theopinionLet me backtrack for a moment. I amnot a fan of hypocrisy and I’m notpreaching a version of it here. Fifteenyears ago, I formed an outsource pro-duction management company spe-cializing in opening new branches in
selected markets formortgage bankers want-ing to expand more rap-idly than their produc-tion management teamcould effectively makehappen on their own.These were turn-keybranches assembled withall the necessary partsand were often co-man-aged by me as a provisionof the contract until theycould be fully absorbedand indoctrinated intothe new employerclient’s culture. This busi-ness model required theformation of a recruit-ing/placement division tomeet the staffing needs,while remaining withincost goals for the branch
acquisition. We joined the recruiter’strade association, got their trade news,tips, professional standards recom-mendations, etc along with those ofour own Mortgage Bankers Association.We filled the positions within the newbranch with employee candidatesbased on compatibility and often mar-keted the remaining book of candi-dates to other employers within thegiven market. In doing so, we inter-viewed the potential employers, aswell as the employees. We found that itwas often more difficult to find goodemployers than to find good employ-ees within a given market. We werealways honest with our employee can-didates relative to their probable suc-cess with a potential employer in theevent they chose to accept employ-ment. Often, we advised them to stayput until a more compatible opportu-nity developed. Becoming involved inthe potential success or failure of
Until recently, I was an owner partnerof a mortgage banking operation. Dueto prevailing and deteriorating marketconditions, the unpleasant decision toclose became necessary. After a briefsabbatical for reflection and grasp ofthe lessons learned, including the factthat self employment has its benefitsand its drawbacks and wanting a breakfrom the latter, I decided to enter thejob market as an employee candidatefor the first time since the earlynineties. The experience has been sur-prising to say the least.
The surpriseAfter contacting numerous recruit-ment/placement organizations, I wasrarely interviewed in person or by tele-phone by recruiters interested in eval-uating my personal and professionaltalents, strengths andweaknesses such as howwell I interview; what mywants or needs in anemployer might be; whatmy professional ambi-tions are or what pri-mary, and even underly-ing, career goals exists.Instead, most often, I wassimply directed to com-plete an online applica-tion and/or resume; sub-mit same and hope for aresponse that may ormay not come for weeksor months later. As anexperienced recruitermyself let me assureeveryone that is not pro-fessional recruiting/place-ment. That is betterdescribed as Internetmeat marketing. It’s a “quantity versusquality,” “for the masses and not theclasses” approach to filling positionswith the bureaucratic human resourcesdepartments of large institutional cor-porate giants which seem to be theonly employers doing much hiring late-ly. When initiating follow-up on myown, I have been made aware of seri-ous deficiencies in the presentationand marketing skills of most recruitersunder the guise of excuses such as,“your resume is intimidating,” “you areover-qualified,” “you won’t be chal-lenged for long before I have to replaceyou” and a myriad of other speculativepossibilities. Yet, if they had investedonly five minutes of their time andeffort they would have realized thatthey were definitely not probabilitiesor certainties. I’m too far down theroad in my career to be a slave to myego and to believe that I am a specialcase, and I have confirmed that beliefwithin the context of the employmentsearch experience. Far too many mort-
Recruiting From the “Compatibility”Approach … the Lost Art
“We’ve all seen successful producers
leave Employer Aand simply cross thestreet to Employer B,
while offering thesame basic menu of
programs and competitive prices ...”
By David Walden
continued on page 39 continued on page 40
Platinum Credit Servicespartners with Red FlagAdvisory Corporation
In response to the Fairand Accurate CreditTransactions Act of 2003(FACT Act), Platinum
Credit Services Inc. (PCS) has formed a part-nership with Red Flag Advisory Corporationto provide a complete and comprehensiveprogram which will keep companies incompliance with the Red Flags Rule.
The Red Flags Rule, in effect sinceJan. 1, 2008, requires many businessand organizations to implement a writ-ten Identity Theft Program designed todetect the warning signs or “red flags” ofidentity theft in their day-to-day opera-tions, take steps to prevent crime, andmitigate the damage it inflicts. The RedFlags Rule is enforced by the FederalTrade Commission (FTC), the federalbank regulatory agencies, and theNational Credit Union Administration.The program which companies mustcreate for the Red Flags Rule mustinclude four basic components, whichtogether create a framework to addressthe threat of identity theft. The programmust include: A platform to detect redflags; identify said red flags; have a pol-icy and procedures manual for combat-ing the red flags; and have updatedtraining on the established program.
Currently PCS has established a prod-uct, Precise ID, which scans a credit reportfor “red flags.” On the report, there is ascoring model which will let the companyknow the risk of potential fraud. The RedFlag Advisory Corporation sets up com-plementary assessment audits, compli-ance manuals, and ongoing training foridentity theft. Together, the two compa-nies offer the marketplace a full completeidentity theft program that is tailored to aspecific company’s needs.
Aug. 1 is the final date beforeenforcement takes place. Beyond thatdate, failure to comply will likely leadto fines starting at $2,500 per incident.For more information, visit www.platinum-creditservices.com.
Interthinx forms alliancewith Document Express
Interthinx hasformed a strate-
gic relationship with DocumentExpress, a firm that provides state-of-the-art mortgage loan documentpreparation, as well as compliant lend-
ing documents, initial disclosures, clos-ing documents, high-cost analysis andflood certificates for lenders through-out the nation. Through the newalliance, the Interthinx PredProtectCompliance Suite has been integratedinto the DX Closing Document system.
The integration provides lenders withthe option to verify loans against high-costthresholds by using a comprehensive reportthat includes full testing at the federal,state, local, and government-sponsoredenterprise (GSE) levels, along with addition-al checks for the Truth-in-Lending Act (TILA)and state consumer loan laws. Through theElite Series of loan closing products andservices, Document Express customers cannow benefit from comprehensive compli-ance reviews that feature clear, simpleworksheets with Interthinx-exclusive Points& Fees Drilldowns to make it easier to com-ply with the law.
“With the torrent of new laws andincreased enforcement by both regulatorsand investors, many lenders will not beable to keep up without outside support,”said Kevin Coop, president of Interthinx.“PredProtect is the industry standard toolfor helping ensure compliance with newlending requirements as they are enacted.The integration of PredProtect with the DXClosing Document system enables lendersto fund loans with increased confidencethat they are in compliance with all appli-cable laws, rules, and regulations.”
“Document Express and our customershave been interested in providing this typeof integration in connection with our EliteSeries of closing services and products,” saidPaul Fosco, president and CEO of DocumentExpress. “There is no longer a need to beconcerned with inaccurate data, re-keyingerrors, or learning the nuances of addition-al verification systems. Clients enter loandata once into their LOS system, order, andget our quality products and services in sec-onds. Nothing could be easier.”For more information, visitwww.interthinx.com or www.document-expressinc.com.
NYLX offers product andpricing technology inByte Software
Byte Software, a provider of loan origina-
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How would you like to generate somebusiness with qualified real estateinvestors using three simple strategiesthat have been lost in all the “bailout”noise and confusion?!
Strategy #1: Utilize areverse mortgage to purchase a two- to four-unit propertyUntil the end of 2009, an investor who isage 62 or older can purchase a two-,three- or four-property worth up to$625,500 with a 30 percent to 35 percentdownpayment, live in one of the units,generate income by renting out the otherunits, and never have to make a mort-gage payment for the rest of their entirelife. This opens up a lot of options forseniors and investors who are wonderinghow to supplement their retirementincome now that their house values andretirement accounts have plummeted.
The reverse mortgage for home pur-chase transactions became available onJan. 1, 2009, and the higher nationwideloan limit of $625,500 (regardless ofcounty) became available severalmonths ago as part of the 2009 econom-ic stimulus plan. Investors who are try-ing to sell their duplexes, triplexes orfour-unit properties can utilize this strat-egy in their marketing as a way of stim-ulating potential buyers. The temporaryhigher loan limit really opens up a lot ofnew options that were not otherwiseavailable for senior investors. The pur-chase price of the property can even begreater than $625,500, but the investorwould need to come to closing withmore cash to make up the difference.Remember, the $625,500 limit expires atthe end of this year, and reverts back to$417,000 in 2010, so your investorclients will need to take action now.
Strategy #2: First-timehomebuyer tax credit …for investors!The $8,000 first-time homebuyer taxcredit can also be utilized on one- tofour-family properties. The greatestthing is that not all buyers need to befirst-time homebuyers. This means thatan individual who qualifies for thecredit can get their parents to co-signon the loan and/or contribute to thedownpayment, and this would not dis-qualify the individual from taking the
credit. A group of friends, relatives orinvestors could get together and buy aduplex, triplex or four-unit property,and the credit can be claimed by anyone or more of the investors as long asthe individual(s) claiming the credit livein one of the units as their primaryhome for at least three years. Theycould claim the credit even though theyare generating income by renting outone or more of the other units.
The maximum Federal HousingAdministration (FHA) loan-limit on four-unitproperties ranges from $521,250 in low-costhousing markets, up to$1,403,400 in the highestcost markets of the country.An investor who is trying tosell their one- to four-familyunit property can also uti-lize this strategy to stimu-late potential buyers. Thisstrategy just became awhole lot easier now thatthe FHA allows the credit tobe utilized as part of thebuyer’s downpayment byeither borrowing against itor selling it to their lender oranother third party. Even ifthe buyer doesn’t use thecredit for their downpay-ment, they can file a formwith the IRS to get a refundcheck this year and theydon’t have to wait until theyfile their 2009 tax returns inApril of 2010. Remember,this opportunity endswhen the credit expires onNov. 31.
Strategy #3: Rent-to-ownand sale-leasebackopportunitiesThere are a large number of distressedhomeowners who will not qualify for themortgage modification plans announcedby the government. These homeownersstill need a place to live, and many willnot be able to qualify for conventional orgovernment mortgage financing for atleast another three to five years.
A rent-to-own strategy is where aninvestor or real estate agent takes a poten-tial homebuyer house shopping eventhough the buyer can’t qualify for tradi-tional financing. The investor buys thehouse, rents it to the tenant who picked
out the house and wants to live there, andgives the tenant the right to buy the homeat a pre-determined price at some pointin the future. A sale-leaseback strategy iswhere a homeowner sells their currentproperty to an investor and then pays theinvestor rent, with the option to buy backthe home at a pre-determined price atsome point in the future.
While most real estate investors arescrambling to find tenants for theirvacant properties, savvy investors couldutilize either a rent-to-own or a sale-leaseback strategy to find tenants before
they commit their invest-ment dollars to a specificproperty. This is a fantasticopportunity for investorsto work with the large pop-ulation of people whowon’t qualify for the gov-ernment foreclosure pre-vention plans. Did youknow that, in many cases,servicers are actuallyrequired by law to fore-close on distressed borrow-ers who have ample equityin their homes because thenet present value of theservicer’s recovery througha foreclosure sale is higherthan the net present valueof their recovery through aloan modification plan?Properly structured sale-leasebacks (as long as theyare not prohibited by thelaws of your state) could beutilized in these cases tohelp the home owner
avoid the foreclosure and recover someof the remaining equity in their home.
The sale-lease back could also be afabulous strategy to help fill the voidleft by the disappearance of stated-income loans. Say you have a self-employed individual who has 50 per-cent-60 percent equity in their home,but cannot qualify for traditional cash-out mortgage financing. A properlystructured sale-leaseback could allowthe client to access the equity in theirhome and avert a disastrous situationdue to lack of liquidity.
There are a few potential landminesto avoid when structuring these types oftransactions. It is illegal in some statesto do a sale-leaseback transaction for
someone currently going through fore-closure. Also, if the tenant defaults ontheir rent or walks away from the deal,the investor could be left holding thebag. On the other hand, if the investordefaults on the mortgage and goes intoforeclosure, the tenant may be evictedby the new owner. The Helping FamiliesSave Their Homes Act (S 896, signedinto law in May 2009) provides two min-imum guidelines that protect tenants inthese and other situations:
� Tenants are now allowed to occupythe property until the end of theirlease term (even after the landlordgoes through foreclosure) as long asthe new buyer does not intend tooccupy the new home as their ownprimary residence.
� If the new buyer intends to occupy thehome as their own primary residence,the tenant must be given a 90-daynotice before being forced to leave.
In all these cases, it is crucial to beproperly trained in the nuances of howto structure transactions in ways thatminimize risk to the clients. Becominga Certified Mortgage Planning Specialist(CMPS) equips you with the uniqueknowledge, skills and resources to helpinvestors, homeowners and homebuy-ers successfully implement these strate-gies and navigate the ever turbulentmortgage and housing markets.
Gibran Nicholas is the founder andchairman of the CMPS Institute, whichadministers the Certified MortgagePlanning Specialist (CMPS) designation.The CMPS Institute has enrolled morethan 5,500 members since its foundingin 2005. Gibran is also the chairman ofPublished Daily, a customizable onlinemagazine, newsletter and marketingservice that helps professionals trans-form their clients and prospects into areferral-generating sales force. He maybe reached at (888) 608-9800, ext. 101 ore-mail [email protected].
Visit author GibranNicholas’s blog athttp://gibrannicholas.com
where he shares his insightson economics, real estate and finan-cial issues, including the currentmortgage and credit crises.
Real Estate Investors: “Where’s My Bailout?”
“While most realestate investors arescrambling to findtenants for their
vacant properties,savvy investors couldutilize either a rent-
to-own or a sale-leaseback strategy tofind tenants beforethey commit their
investment dollars toa specific property.”
BY GIBRAN NICHOLAS
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FRUSTRATEDBy other Hard Money Lenders?
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someone’s career and livelihood is atremendous responsibility and must betreated as such!
Practicing the tradeFrom the beginning of each contractthrough to final conveyance, if I didn’talready have a good working knowl-edge of the employer client’s culture,I invested significant time andresearch into gaining an explicitunderstanding of the businessphilosophies and personality of thecorporate production managementfor whom I would assemble a branchin order to match those componentsbetter with those same two compo-nents of the employee candidates tobe recruited. I wanted the placementsto stick. After all, recruiters must fre-quently guarantee free replacementof employees and typically those thatdepart within the initial three to sixmonths of employment. The blamefor the departure typically rests onthe employee within the context ofthe replacement guarantee. In thatcontext, its simply good businesspractice, and certainly more cost-effective, to do the job right in thefirst place than do it repetitiously forfree. We’ve all seen successful pro-ducers leave Employer A and simplycross the street to Employer B, while
offering the same basic menu of pro-grams and competitive prices to thesame Realtors and homebuilders cus-tomers only to bomb because theyaren’t “compatible” with the businessphilosophies and personalities oftheir new management and theresulting “culture” of their newemployer.
Moving forwardMy specialty has always been produc-tion, whether retail, wholesale or corre-spondent. I have personally managedsuccessful production departments forall three types and recruited for allthree types, as well as affiliate branchnetworks. My experience and intuitiontells me that traditional retail produc-tion will be the first type of productionplatform to experience growth whenthe market turns around. Therefore, Iwill offer the following recommenda-tions and insights to those specializingin retail production when consideringnew employment opportunities thatwill come.
Be self-awareKnow who you are! Compatibility isthe primary key to a successful andproductive employment relationship.It is paramount that employee candi-dates are self-aware that their own
needs and goals are constantly evolv-ing and that the profile of the employ-er culture with which they are mostcompatible at any given time changeswith them.
Every day, the loan officer in a tra-ditional production culture, primarilyserving real estate agents and home-builders, he/she faces the prospect ofbeing blamed for events often beyondtheir control and being fired by one orboth of their employers as a result! Topossess the personal self-esteem andprofessional constitution to endurethese challenges daily without suc-cumbing to burnout within three tofive year cycles is almost super-human! You deserve to be represent-ed as such.
No need to go it aloneTop performing producers not experi-encing burnout should considerchoosing a recruiter to be their agent,and then be patient and allow them toconduct a thoughtful search for a com-patible employer. An existing, well-performing team wanting to remain asa working unit for a company beingclosed or acquired or a good producerwith leadership qualities who may notbe a “top performer” individually, butcan assemble and lead a team of goodperformers whose aggregate produc-tion equates to a “top performinggroup” can do this too. The recruiterrepresents the producer or groupexclusively on a “no cure, no pay”basis, but the potential employer pays
their tab plus reimbursements formarketing/advertising cost advancedby the producer or group for thesearch for the employer. Sports andentertainment stars have agents andmortgage stars can too!
Facing the factsA top performing producer with aproven track record of quality vol-ume origination numbers will be indemand in any market condition,including the present one. Let’s faceit … no employer is going to attemptto recruit one by saying, “We’re anawful place to work, so come to workfor me and I’ll wreck your success.”They are going to present anddescribe their organizations in thebest possible light. Those representa-tions are unfortunately often misrep-resentations. It doesn’t really matterin the end if those misrepresenta-tions are intentional or just prejudi-cially naive. Think about it. The onlydifference between murder andmanslaughter is the existence of“intent,” but the victim doesn’t care.They’re dead either way.
An objective solutionTo minimize the risk of selecting anew employer in error because theysimply told the producer what theywanted to hear, choose a recruiterthat has served in management posi-tions with mortgage banks. There are
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fewer of those than recruiters whosimply claim to specialize in mortgagebanking placement, but they do existin growing numbers in most majormarkets. They have attended produc-tion management seminars, sat inmanagement meetings, understandwhat does and does not make goodbusiness sense from both the corpo-rate and the producer sides of the pol-icy equations when mediating andresolving conflicts of purpose. Andmost importantly, they know whatquestions to ask employer clients andwhether the answers received areindicative of production-friendly cul-tures. As an employer, I alwaysenjoyed working with knowledgeablerecruiters who understood the needsof my business and what works andwhat doesn’t. I had to interview farfewer candidates to find the right oneand a good fit. They earned my respectand their fee. As an employee candi-date, I wouldn’t want anything less.
The employer is often going to bemore candid and even drop their guardto reveal true colors with a recruiterworking for a placement fee and per-ceived as an extension of the employer.Likewise, an employee candidate isgoing to be more open and revealing toa recruiter because they are not theemployer. The insights available fromthese positions of observation and con-text are invaluable to a good, profes-sionally-executed placement if usedproperly by the recruiter who can listenthrough an answer to the real meaningof the answer.
Top producers are almost alwaystop producers because of their entre-preneurial personalities. To continuetheir success, they would be well-advised to focus employment searchefforts on entrepreneurial productioncultures. That’s compatibility. Theythrive best as big fish in smaller pondsthan small fish in the biggest ponds.As a recruiter, when seeking to fillpositions within traditional and entre-preneurial production platforms serv-ing real estate sales professionals, Ifound the large, institutional employ-ers to be more valuable as ‘farms’ thanas employer clients because my busi-ness model was focused on qualityversus quantity.
Cultural differencesThe larger mortgage banks embracethe call center type production plat-form in part because of the monoga-mous and structured rules-based cul-ture. Their employees function strictlywithin their policies and answer onlyto them. By comparison, the repeatbusiness-oriented, entrepreneurialtype of loan officer working withinthe more traditional production plat-form culture actually recognizes thatthey have two different employers …the institutional lender who writes
their paycheck and their new businessreferral customers who “employ”their services and give them their verypurpose to exist. That loan officeroften must serve as mediator whenthose two employers occasionally findthemselves at cross-purposes overturnaround times, subjective under-writing conditions or decisions, meet-ing contract closing dates, pricingissues, lock expirations and a myriadof other traps that must be cleared inthe origination process. The institu-tional employer demands to be putfirst by expecting the employee to bea “company man.” However, thereferral customer expects to be putfirst because they believe the loanofficer’s reps and warranties, includ-ed by statement or implication, thatthey would do everything withintheir power to expedite a competentand professional effort to smoothout all of the bumps in the road onthe way to a pleasant and painlessexperience for their buyers on whomthey depend for future referrals tofriends, relatives and co-workers fornew business!
Living the lifeIf the issue at conflict between thetwo employers is perceived to be“internal” to the institutional employ-er, the other believes that removingor solving the obstacle is completelywithin the will of the loan officer’slender and that refusal to do so sug-gest that either the loan officer isn’tmaking an effort to resolve the prob-lem or his company lacks sufficientrespect for the loan officer to accom-modate his/her efforts to achieve cus-tomer satisfaction. An institutionalemployer can make a decision withina matter of seconds … the effects ofwhich can take six months or more toovercome before new business oppor-tunities can be resumed from thebusiness referral customer employer.Often such, decisions are objectiveand unavoidable. Often … they arenot. Regardless … when such deci-sions are made and lines are drawn inthe sand as a result, the employer onthe losing end usually considers theloan officer to be responsible. Mostlarge/mega banks and mortgagebanks cannot deal with this sort ofculture. They created policies to servetheir business and have evolved intorules-based bureaucracies who nowcan only serve their policies.
There’s a place and purpose for everyoneTheir “don’t bother me with the facts,here’s our policy” creed wreaks havocwithin the entrepreneurial-oriented,traditional production culture whichis why few mortgage production stars
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tion software for banks, credit unions andmortgage brokers, has announced a part-nership with NYLX to provide product eli-gibility and best execution loan pricingtechnology to its customer base. ThroughByte Software’s partner program, ByteLink,NYLX has created a seamless interface toaccess product and pricing information formortgage loans while in BytePro. With theNYLX integration, Byte Software customershave instant access to a provider of real-time lender rates and guidelines.
The NYLX integration leverages itsLoanDecisions solution platform, whereBytePro users benefit from multi-investor/multi-product pricing displaysand accurate investor data, enablingquick reaction to live market conditions.Management benefits from control andoptimization of locks based on price andrevenue targets, helping to achieve profitgoals and competitive advantage deliv-ered through a seamless user interface.
“The new integration between NYLXand Byte Software provides banks, creditunions and mortgage companies withenhanced functionality that enables loanofficers to make faster and more effectivedecisions at the point of sale,” said JohnAlexander, president of NYLX. “A seamlessuser experience delivers best execution eli-gibility and pricing, helping loan officersprioritize their pipeline and more aggres-sively target high value prospects. This jointsolution leverages the NYLX universal inte-gration platform and offers significantvalue and bottom line impact for NYLX andByte Software mutual customers.”For more information, visit www.nylx.comor www.bytesoftware.com.
Lenders One continues tomembership growth
After the additionof 42 new membersto its roster in 2008,
Lenders One Mortgage Cooperative, anational alliance of mortgage bankers, hasannounced that it is continuing the trendof steady growth by adding seven newmembers in the first quarter of 2009 andanother six members in the month of April.
“Independent mortgage bankers mustrely heavily on the help of their peers totransform today’s mortgage challengesinto opportunities for growth,” said ScottStern, CEO of Lenders One. “That is why somany of them have turned to LendersOne. We provide our members access toquality products and services, while givingthem opportunities to network with avariety of industry professionals.”
Springfield, Mo.-based Oakstar Bankjoined Lenders One in January. Thelocally-owned community bank focuseson providing up-to-date technology.Julie Barker, executive vice president,said, “Lenders One’s business modelgives us the power of combined pur-chasing and working with some of thebest investors and vendors. Oakstar willbecome a stronger bank because of ourmembership in Lenders One Mortgage
Cooperative, and we will have theknowledge and industry associations tohelp us achieve market leadership.”
Other new members from the firstquarter include: Ideal Home Loans inEnglewood, Colo.; Covenant Mortgagein Westford, Mass.; Advisors MortgageGroup in Manasquan, N.J.; Platte ValleyBank in Platte City, Mo.; PinnacleMortgage Group in Lakewood, Colo.;and Trident Mortgage Company inDevon, Pa.
“Each year the cooperative’s mem-bership has experienced steady growth,and that is especially notable becauseof the very unpredictable state of themortgage industry,” said Stern. “Ourstrong presence in the current mort-gage industry is further evidence of thevalue that mortgage bankers see inmembership with Lenders One.”For more information, visit www.lender-sone.com.
LoanMarket.NET partnerswith First American TitleInsurance
LoanMarket.NET, an onlinemarketplace for buyingand selling real estate-
secured note investments, has part-nered with First American TitleInsurance Company, the largest sub-sidiary of The First AmericanCorporation family of companies, tooffer buyers and sellers an integratedthird-party solution for title insuranceand closing settlement.
“We’re very excited to offer our buyersand sellers an integrated title and escrowsolution from First American, one of themost trusted names in the title insuranceindustry,” said Jeff Freud, founder andpresident of LoanMarket.NET. “Theirproven technology, expertise and nation-wide reach will ensure LoanMarket.NETcustomers a seamless title and settle-ment process.”
The First American partnership pro-vides LoanMarket.NET and its userswith a single source for accurate, effi-cient and cost-effective title and settle-ment services nationwide. “FirstAmerican is honored to be chosen asthe settlement service provider forLoanMarket.NET’s innovative businessplatform,” said Vincent Foley, vice pres-ident of First American Title InsuranceCompany. “We believe that our central-ized national solution is a perfect fit forbuyers and sellers operating in anonline marketplace environment.”
LoanMarket.NET is designed to offerboth existing note investors and thoseinterested in investing in this asset classfor the first time unprecedented accessto the market. Since its launch,LoanMarket.NET has empowered bothbuyers and sellers of notes by creatinga neutral, open marketplace that bringsprice discovery, transparency and effi-
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MortgageDashboardselects Interthinx for fraudsolution integration
Interthinx, a providerof proven risk miti-
gation, fraud detection and regulatorycompliance tools for the residential mort-gage industry, has successfully integratedits fraud prevention system withMortgageDashboard’s loan originationsystem, MortgageDashboard. The integra-tion enables MortgageDashboard tooffer customers a seamless interfacewith automatic and proven screening forpotential fraudulent activity. BenchMarkMortgage was recently introduced toMortgageDashboard’s expanded loanorigination system. MortgageDashboardintegrated Interthinx’s FraudGUARD prod-uct, a fraud detection tool that measuresand scores fraud risk against public, pri-vate and proprietary data sources.
“Mortgage fraud continues to impact
the industry in insidious and highlydestructive ways, and Interthinx is com-mitted to aligning with companies likeMortgageDashboard that share thecommon goal of fighting fraud at origi-nation,” said Kevin Coop, president ofInterthinx. “Interthinx offers provensolutions that help prevent and detectfraud, supported with proactive educa-tion and training to help mortgage pro-fessionals identify fraudulent activitybefore it does damage to a company.”
MortgageDashboard enables the pro-cessing of paperless mortgages for lenders,credit unions and banks. It provides loanproduct optimization, loan application pro-cessing, all state-specific forms and disclo-sures, automated underwriting and closingdocuments. In addition to conventionalloans, the platform supports subprimeautomated underwriting as a Web service.
“To provide a robust loan originationsystem, vendors have realized that we continued on page 43
must integrate components that helpour customers easily detect and preventfraudulent activity and risk,” said JorgeSauri, president of MortgageDashboard.“To offer the most efficient solution, weselected Interthinx to give our customersstreamlined fraud detection via a singleclick within MortgageDashboard.”For more information, visit www.mort-gagedashboard.com or www.interthinx.com.
Loan Score rolls out inte-gration with Encompass
Loan Score DecisioningSystems, an enter-prise-class pricing
and automated underwriting solutionsprovider, has announced that it hasembedded its product and pricing engine(PPE), PowerPricer, within Ellie Mae’sEncompass Banker Edition. The new inte-gration offers customers the ability toquickly price, run eligibility and selectloan programs both at the point-of-sale(POS) and also in the back office fromwithin their Encompass MortgageManagement Solution.
“We want to make it as easy as pos-sible for our clients to do business,”said David P. Colwell, executive vicepresident at Loan-Score. “Integratingour PPE with Encompass allows users tocontinue working in the LOS whileLoan-Score’s rules engine operatesbehind the scenes. This level of trans-parency is paramount to establishingease of use and rapid user adoption.Because both of our platforms are uti-lized on a software-as-a-service (SaaS)
basis, it really helps alleviate the IT bur-den of having to support technologyinfrastructures and changing data.”
Loan-Score’s PowerPricer is the prod-uct and pricing component of its com-prehensive decisioning suite, which canbe used for all lending channels andproducts. Pricing and guidelines can becustomized to blend programs at the POSand then re-decision deals for best execu-tion at the secondary desk. In addition tocentralizing pricing for all lending chan-nels, PowerPricer also returns instantproduct eligibility and best-fit pricing,provides loan-level drill downs in thepipeline, submits lock requests, ensuresthat pricing and investor guidelines areup-to-date, and offers additional produc-tion-facing tools.For more information, visit www.loan-score.com.
Mortgage WarehouseNetwork offers solution forbanks to enter the ware-house lending industry
Mortgage WarehouseNetwork, a service
provider offering mid-sized banks a sim-plified and cost-effective way to partici-pate in warehouse lending, has launcheda “turn-key” solution that includes theback office operations, systems andexperienced personnel that banks needto establish and maintain highly prof-itable warehouse lines quickly, safelyand economically.
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practice their trade from mega-bank-owned or -operated platforms. Thisisn’t meant to be an indictment. Theyreally have no choice due to their sizeand the regulatory scrutiny they faceconstantly. Some offer an almost mini-university style menu of excellenttraining programs for a wide variety ofsubjects for those producers who wantto develop expertise in differentprocesses, functions and/or govern-ment and conventional loan pro-grams. And they represent very goodemployment opportunities for manygood seasoned mortgage profession-als. When burnout for a producer hap-pens and it will at least once during atypical loan officer’s career, the callcenter production platforms particu-larly at the servicing mega-banks are agood alternative base from which touse one’s skills, program and processknowledge and lender experiencewhile avoiding the stress and tension
related to the marketing side of thisbusiness to real estate sales profes-sionals and other referral sources.
Again, be self-aware of the culture inwhich you will be most compatible atvarious stages of your career andchoose your employment opportunitieswhere you can contribute the most.
David Walden is a 39-year veteran ofthe mortgage banking industry, spe-cializing in the mortgage productionmanagement of retail, wholesale, cor-respondent and affiliate branch origi-nation strategies, and currently ownsProduction Solutions, outsourced pro-duction management and staffing. Inaddition, David also owns Risk &Recovery Solutions, conducting mort-gage fraud detection, investigation,prosecution and asset recovery. Hemay be reached by e-mail [email protected] [email protected].
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ciency to the traditionally opaque sec-ondary market for real estate-securedinvestments.For more information, visit www.loanar-ket.net or www.firstam.com.
Mortgage Professionalsto Watch� JPMorgan Chase has named Thanh
Roetelle head of warehouse lendingfor its bank division.
� The Mortgage Bankers Associationhas announced the nomination ofMichael W. Young as the associa-tion’s vice chairman-elect.
� MRG Document Technologies hasadded Michael O’Leary as seniormortgage consultant and CraigKaley senior technology specialist.
� Cheryl Hemingway has joinedQuestSoft as senior account manager.
� Madison Commercial Real EstateServices has announced the hiring ofPatrick Anarumo, Terence P.Guerriere Esq., Joseph J. NapolitanoEsq., Danielle Sprouls Esq. andLouis H. Weinberg Esq.
� Radian Guaranty has announcedthe addition of 13 new local accountmanagers: Tim Allen in Mississippiand Alabama; Cassaundra Brendenin Minnesota, North Dakota andSouth Dakota; Carey Buckey inConnecticut and western/centralMassachusetts); Phyllis Cox inHawaii; Brooke Keitel in Oregonand southern Washington; PamelaOrmsby-Ripley in Houston, Texas;Laureen Potter in western and cen-tral Pennsylvania; Stephan Poulson
in southern California; RayRodriquez in New York, northernNew Jersey and Vermont); BryanSetlik in Iowa and Nebraska; ShariSpiess in Washington; Kellie Stegerin Virginia; and Michelle Weiss inAlaska.
� USA Funding has announced thehiring of Ryan Gajevic and AliciaMcClendon as trusted mortgageadvisors, Jaymee Catrine as proces-sor, and Joshua Kowalke as assis-tant processor.
� Greystar Real Estate Partners hasannounced that Tracy Bowers wasjoining the company as senior direc-tor of real estate.
� Ronald Ahlensdorf Jr. has joinedPro-Teck Services as senior director,business development.
Your turnNational Mortgage Professional Magazineinvites its readers to submit any informa-tion, events, passages, promotions, per-sonal or professional occurrences thatseem appropriate and/or other pertinentdata to the attention of:
Heard on theStreet/MortgageProfessionals toWatch column
Phone #: (516) 409-5555E-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.
NMLS
istock.com/pokkiistock.com/pokki
MortgageMarvel.com enables bor-rowers to get instant and accurate mort-gage rate and fee quotes from a nation-wide network of banks and creditunions. All borrowers need to do isenter four pieces of data: Loan amount,property value, property zip code andcredit score. No personal information isever required. Mortgage Marvel displaysa selection of free, accurate, up-to-datemortgage rate and fee quotes from mul-tiple lenders in an easy-to-understandtable.
“In today’s Internet-enabled society,mortgage shopping shouldn’t be a has-sle,” said Happ. “And while we’repleased with the growing acceptance ofMortgage Marvel among both mortgagelenders and consumers, we know that aconsumer’s credit score can directlyinfluence the cost of borrowing.”
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 submissions isthe 1st of the month prior to the targetissue.
Encompass customers an affordable,easy-to-use and accurate automatedunderwriting and pricing engine,” saidBruce Backer, president of LoanSifter.“In this constantly changing market,keeping up with fluctuations is animportant task for mortgage origina-tors, and LoanSifter’s Web-based solu-tion delivers better service and moreoptions for originators to present totheir borrowers.”For more information, visit www.loan-sifter.com or www.elliemae.com.
Mortgagebot unveils V2.0 of Mortgage Marvel
Mortgagebot has unveiledVersion 2.0 of MortgageMarvel, its onlinemortgage shopping
service. The new Mortgage Marvelincludes a credit-score feature thatenables all mortgage shoppers—regardless of their credit score—to getinstant, accurate, personalized andanonymous mortgage quotes via theInternet.
“A key factor that makes MortgageMarvel so different from other mort-gage shopping services is that everyquote is created in real time, directlyfrom the ‘live’ product databases of par-ticipating lenders,” said Scott Happ,president and CEO of Mortgagebot LLC.“All quotes are built using live loanproduct data; so consumers can havethe confidence that they will never get‘bait-and-switch’ quotes or ‘teaser’ rateswith Mortgage Marvel.”
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800 Veterans Hwy, Suite 300, Hauppauge, NY 11788Licensed Mortgage Banker NYS Banking Department
Lic. Mortgage Banker: CA, CO, CT, DE, FL, GA, IN, MD, MI, MO, NC, NH, NJ, NM, NY, PA, SC, TN, TX State Banking Depts.
800-462-4862 main officee-mail [email protected]
www.unitedmortgage.com
UNITED MORTGAGE CORP.
What a True Full Service Lender is all about!• Competitive Pricing!• Superior, Personalized Service!• Industry Leading Turn Times!
• Licensed in 20 States!• Hands-on, Common Sense Underwriting!• Committed to helping YOU grow!
See how United Mortgage Corp. is re-defining“Broker Friendly”!
Call and Speak to Experienced Wholesale Manager Patrick Creighton Today!
new to market continued from page 41
“In these times of low interest ratesand surplus capital, banks are looking forways to bring higher returns on equitywhile still staying in safe investments,”says Dennis Ferstler, Mortgage WarehouseNetwork’s chief executive officer.“Mortgage Warehouse Network answersthat need and provides exceptionalreturn-on-equity based on a safe businessplatform. Many banks are discovering thatwarehouse lending is not only one of themost lucrative, profitable and safe invest-ment areas for banks, it’s also now fastand easy to establish.”
Mortgage Warehouse Network’s solu-tion allows banks to establish a ware-house line, without the investment,time and development effort involvedin creating an entirely new bank divi-sion from the ground up. With MortgageWarehouse Network, banks have theability to fund their first loans within 60days of signing up. Mortgage WarehouseNetwork provides the systems, policies,procedures and human capital requiredto initiate and maintain a warehouseline, in addition to providing the finan-cial modeling and managing the ongo-ing credit analysis.
“We are essentially boarding singlefamily mortgage loans at a discount foran average of 15 days,” says Jeff White,chief operating officer of MortgageWarehouse Network. “A lot of banks areinterested in entering the warehouselending space, but simply don’t want togo through the time, hassle and finan-cial commitment of creating an entirelynew division. Now, they don’t have to.”
Mortgage Warehouse Network utilizesone of the most powerful technologyplatforms in the industry providing seam-less and transparent operations, fundinglogs, fraud detection, redundant under-writing and real-time reporting. Thiscomprehensive database contains every-thing the bank needs and can be easilyintegrated into their general ledger andbank software, eliminating errors thatoften occur with manual processes.For more information, visit www.mortgage-warehousenetwork.com.
Convergys launches loanmodification solution
Convergys Corporation,a relationship manage-ment company, hasannounced the avail-
ability of Convergys Loan ModificationSolutions. The solutions enable mortgageservice providers to quickly and effec-tively respond to heavy customerdemand for refinancing by leveragingConvergys’ live agent assistance andself-service automation technology,proactive outbound communicationsvia voice, e-mail or text, and analytics toencourage loan retention and newlending, while lowering service costs.The solutions are available as a fullsuite or as individual services.
“Mortgage companies and financial serv-
ices institutions are faced with managingthis incredible volume of requests,” saidAndrea Ayers, president, customer manage-ment, for Convergys. “They require toolsthat are specifically designed to help themmanage the call volume while still driving asuperior customer experience. ConvergysLoan Modification solutions give mortgageproviders a single source for the tools theyneed to meet their primary objective—increasing retention by proactively manag-ing the experience to optimize customervalue over the life of the account.”
The Convergys Loan Modificationsolutions include skilled contact centeragent services, on-demand intelligentself-service automation from ConvergysOn-Demand Speech, outbound notifica-tions for proactive communications tocustomers, and analytics to aid withintelligent routing and measurement ofcustomer satisfaction. This building-block approach allows mortgageproviders to quickly increase their capa-bilities to accommodate large volumeof customer calls about company- andgovernment-initiated programs, such asthe Homeowner Affordability andStability Program (HASP).For more information, visitwww.convergys.com/loanmod.
LoanSifter forms strategicpartnership with Ellie Mae
LoanSifter, Inc.,Web-based, point-
of-sale product pricing and eligibility(PPE) tool, has announced an integra-tion with Ellie Mae’s Encompass BankerMortgage Management System, a loanorigination and management systemfor mortgage bankers and brokers. Thisseamless integration will allow loan offi-cers to leverage instant pricing decisionsacross their entire investor databasefrom within Encompass, returning “buy”and “sell” side pricing that appropriate-ly incorporate SRPs, margins and otherincentives in addition to the accurate,branch-specific, risk-based pricing.
Prospects originating from theEncompass system will be transferredinto LoanSifter, along with their pricingscenarios, allowing for the immediate,simple creation of real-time monitor-ing, ongoing e-mail pricing campaigns,and other marketing materials that areaccurately targeted to the borrower’sunique scenarios.
This is in addition to the seamlessworkflow of submitting a pricingrequest from Encompass to LoanSifter,whose automated underwriting solu-tion (AUS) allows the loan officer todetermine the best-execution pricingstrategy quickly before pushing thoseresults back into the secondary deskwithin Encompass. From there, the sec-ondary department can immediatelyre-price the loan for confirmation, andutilize integrations from withinEncompass to the selected lender.
“LoanSifter offers Ellie Mae’s
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JULY 2009Wednesday-Saturday, July 29-August 1
California Association of MortgageBrokers 2009 Annual Convention
& Grand Exposition San Diego Marriott Hotel & Marina
333 West Harbor DriveSan Diego Convention Center
111 West Harbor DriveSan Diego
For more information, call (916) 448-8236 or visit www.cambweb.org.
AUGUST 2009Tuesday-Friday, August 11-14
American Association of ResidentialMortgage Regulators 20th Annual
Regulatory ConferenceThe Hyatt Regency Savannah
2 West Bay Street • Savannah, Ga.For more information, call (202) 521-
3999 or visit www.aarmr.org.
SEPTEMBER 2009Wednesday-Friday, September 9-11
Mortgage Bankers Association ofPennsylvania Annual Conference
The Eisenhower Hotel & Conference Center
2634 Emmitsburg RoadGettysburg, Pa.
For more information, call (888) 739-9991 or visit
www.mba-pa.org.
Wednesday-Friday, September 9-11
Mortgage Bankers Association ReverseMortgage Lending Conference
The Westin GasLamp Quarter San Diego910 Broadway Circle
San DiegoFor more information,
call (800) 793-6222 or visit www.mortgagebankers.org.
Thursday, September 10Minnesota Mortgage Association 2009
Convention & Exhibitor ShowcaseThe Hyatt Regency Minneapolis
1300 Nicollet MallMinneapolis
For more information, call (952) 345-3240 or
visit www.themma.org.
Thursday-Friday, September 10-112009 Nebraska Association of MortgageBrokers/Nebraska Mortgage Association
Fall ConferenceEmbassy Suites Omaha-La Vista Hotel &
Conference Center12520 Westport Parkway
La Vista, Neb.For more information,
call (402) 505-7180 or visitwww.nebraskamortgagebrokers.org.
Monday-Wednesday, September 14-16
Mortgage Bankers Association RegulatoryCompliance ConferenceThe JW Marriott Hotel
1331 Pennsylvania AvenueWashington, D.C.
For more information, call (800) 793-6222or visit www.mortgagebankers.org.
Wednesday-Thursday, September 16-17
2009 Missouri Association of MortgageBrokers Trade Show & ConventionSt. Charles Convention Center and
Embassy Suites Hotel2 Convention Center Plaza
St. Charles, Mo.For more information, call (314) 909-
9747 or visit www.mamb.net.
Thursday-Friday, September 17-18Mortgage Bankers Association Human
Capital Management SymposiumMBA Headquarters
1331 L Street NW • Washington, D.C.For more information, call (800) 793-
6222 or visit www.mortgagebankers.org.
Monday-Tuesday, September 21-2220th Annual Illinois Association of
Mortgage Professionals Fall ConferenceThe Sheraton Hotel3400 Euclid Avenue
Arlington Heights, Ill.For more information, call (630) 916-
7720 or visit www.iamp.biz.
OCTOBER 2009Friday-Saturday, October 2-3
Kentucky Association of MortgageProfessionals 2009 Annual Convention
Belterra Casino & Golf Resort777 Belterra Drive
Belterra, Ind.For more information, call (270) 929-
2836 or visit www.kyamp.net.
Monday-Tuesday, October 5-6Washington Association of Mortgage
Professionals 2009 Real Estate Lenders Conference & Expo
Meydenbauer Center11100 NE 6th Street
Bellevue, Wash.For more information, call (866) 425-
7250 or visit www.wamb.org.
Sunday-Wednesday, October 11-14Mortgage Bankers Association 96th
Annual Convention & ExpoSan Diego Convention Center
111 West Harbor DriveSan Diego
For more information, call (800) 793-6222or visit www.mortgagebankers.org.
Wednesday-Friday, October 21-23Pennsylvania Association of MortgageBrokers and New Jersey Association ofMortgage Brokers Regional Conference
Trump Taj Mahal Casino Resort1000 Boardwalk at Virginia Avenue
Atlantic CityFor more information, call (973) 379-
7447 or visit www.njamb.org.
Friday, October 30Oregon Association of Mortgage
Professionals 2009 Annual Convention“The Best of the Best”
Location to be determinedFor more information, call (503) 670-8586 or visit www.oamponline.com.
NOVEMBER 2009Monday-Thursday, November 2-5
Virginia Association of Mortgage Brokers21st Annual Convention
Williamsburg Lodge310 South England StreetColonial Williamsburg, Va.
For more information, call (804) 285-7557 or visit www.vamb.org.
DECEMBER 2009Sunday-Tuesday, December 6-8
NAMB/WESTMGM Grand Hotel & Casino
3799 Las Vegas Boulevard SouthLas Vegas
For more information, call (703) 342-5900 or visit www.namb.org.
FEBRUARY 2010Monday-Thursday, February 1-4
Mortgage Bankers AssociationCREF/Multifamily Housing
Convention & ExpoMandalay Bay Resort & Casino
3950 Las Vegas Boulevard SouthLas Vegas
For more information, call (800) 793-6222 or visit
www.mortgagebankers.org.
Tuesday-Friday, February 23-26Mortgage Bankers Association NationalMortgage Servicing Conference & Expo
Manchester Grand Hyatt1 Market Place
San DiegoFor more information,
call (800) 793-6222 or visit www.mortgagebankers.org.
APRIL 2010Sunday-Wednesday, April 25-28
Mortgage Bankers Association NationalTechnology in Mortgage Banking
Conference & ExpoHyatt Regency Chicago151 East Wackler Drive
ChicagoFor more information, call (800) 793-
6222 or visit www.mortgagebankers.org.
AUGUST 2010Wednesday-Friday, August 18-20California Association of MortgageBrokers 2010 Annual Convention
& Grand ExpositionHyatt Regency Long Beach
200 South Pine AvenueLong Beach Convention Center
300 East Ocean BoulevardLong Beach, Calif.
For more information, call (916) 448-8236 or visit www.cambweb.org.
To submit your entry for inclusion in the National Mortgage ProfessionalCalendar of Events, please e-mail the details of your event, along with
contact information, to [email protected].
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COMPANY WEB SITE PAGEACC Mortgage .................................................... weapproveloans.com ........................................39
All Real Estate Solutions LLC ................................ allREsolutions.com ............................................17
All Regs.............................................................. www.allregs.com ..............................................41
Continental Home Loans Inc.........................................................................................................21
Elliott and Company Appraisers Inc. .................... www.appraisalsanywhere.com ............................18
Emigrant Mortgage Company .............................. www.emigrantmortgage.com ..............................27
First Source Capital Mortgage Inc. ........................ www.ruralhomeloan.com ..................................24
Flagstar Bank .................................................... www.wholesale.flagstar.com ..................Back Cover
Franklin First Financial........................................ www.franklinfirstfinancial.com ............................29
Frost Mortgage Banking Group ......................................................................................................9
Guaranteed Home Mortgage ................................ www.joinguaranteed.com ..................................11
HTDI Financial.................................................... www.startacreditrepaircompany.com ....................13
Hudson Valley Processing .................................... www.hudsonvalleyprocessing.com ......................12
Informative Research .......................................... www.informativeresearch.com ............................19
Mortgage Now Inc............................................... www.mtgnow.com ............................................25
NAMB/West ........................................................ www.namb.org ..................................................6
NAPMW.............................................................. www.napmw.org ..............................................42
New York Appraisal Management Services Inc. ...... www.nyams.com ..............................................15
Platinum Credit Services Inc. .............................. www.platinumcreditservices.com ..........................7
Presidents First Mortgage Bankers........................ www.presidentsfirst.com ..............Inside Back Cover
Quality Mortgage Services.................................... www.qcmortgage.com ................................18 & 33
ThinkReverse! .................................................... www.mortgageproshop.com ............................LA 2
TruClose Financial Services LLC ............................ www.besstitle.com ....................................34 & 36
United First Financial .......................................... www.unitedfirstfinancial.com ..............................17
United Mortgage Corp. ........................................ www.unitedmortgage.com ..................................43
United Wholesale Mortgage ................................ www.uwmco.com ......................Inside Front Cover
Value Financial Mortgage Services Inc. ................ www.valuefinancial.net ......................................31
Wells Fargo Home Mortgage ................................ www.brokersfirst.com ........................................20
� Presidents First is a multi-state, full-service home mortgageBanker dedicated to offering quality mortgage solutions with anunwavering commitment to service. Having years of experience inthe mortgage industry, we understand what’s important.Presidents First is dedicated to providing our customers withintelligent, innovative mortgage products at aggressive rates andunparalleled service levels. Utilizing hands-on common senseunderwriting, expeditious closing strategies and personalizedaccount servicing, Presidents First is focused on helping ourcustomers to grow their business. Offering affordable lendingsolutions for borrowers that deserve quality loan programs andstability - it’s clear to see why Presidents First is America’s LeadingWholesale Lender.™
Presidents first
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For additional information Please contact us at:1-877-773-7178445 Broadhollow RoadMelville, NY 11747 � www.presidentsfirst.com �
� Call Now: 1-877-773-7178 �
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