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2012PRESORTED STANDARDU.S. POSTAGE PAIDNMP MEDIA CORP.

NMP MEDIA CORP.1220 WANTAGH AVENUEWANTAGH, NEW YORK 11793

Mortgage Bankers Association of GeorgiaP.O. Box 801 � Macon, GA 31202-0801

Phone #: (478) 743-8612 � Fax #: (478) 743-8278Web site: www.mbag.org

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Mortgage PROFESSIONALG E O R G I A

M A G A Z I N E

Your source for the latest on originations, settlement, and servicing

2011-2012 MBAG BOARD OF GOVERNORSPhone # E-mail

Georgette Mooneyham President (770) 794-0011 [email protected]

Frank Lee First Vice President (706) 821-6032 [email protected]

Steve Copeland Second Vice President -------- [email protected]

Greg Shumate Secretary/Treasurer -------- [email protected]

Chum Balk Immediate Past President (706) 739-1783 [email protected]

JD Crow Executive Broker Liaison (770) 279-0222, ext. 225 [email protected]

BOARD OF GOVERNORSTony Boothe State-at-Large (2012) (404) 639-6642 [email protected]

Ashley Crosslin State-at-Large (2012) (678) 772-6291 [email protected]

Isaac Berry State-at-Large (2012) (770) 475-6161 [email protected]

Rick Darlington AMBA President (2011-2012) (800) 849-7944 [email protected]

DISTRICT IAmy Coile (2012) (706) 559-4482 [email protected]

Kim Nelson (2013) (678) 551-7121 [email protected]

Rick Darlington (2013) (800) 849-7944 [email protected]

DISTRICT IISteven Alexander (2012) (404) 264-7947 [email protected]

Bobby Taylor (2013) (478) 953-4490 [email protected]

Kevin McDougal (2014) (706) 860-4200 [email protected]

DISTRICT IIITracey Burdette (2012) (912) 330-9115 [email protected]

Walter Moody (2012) (478) 746-2063 [email protected]

Lisa Lively (2014) (912) 355-9902 [email protected]

ASSOCIATE MEMBER GOVERNORSMaggie Reames (2012) (404) 943-9910, ext.112 [email protected]

Richard Shafritz (2012) (404) 255-8183 [email protected]

Patti Griffith (2012) (229) 938-7425 [email protected]

Michael O’Neill (2012) (404) 250-3300 [email protected]

Loretta Salzano Legal Counsel (770) 248-2885 [email protected]

Richard Raymer Government Affairs (678) 281-6499 [email protected]

Mo Thrash Legislative Liaison (678) 281-6445 [email protected]

Teri Kramer Executive Director (478) 743-8612 [email protected]

Eric Knowland Assistant Executive Director (478) 743-8612 [email protected]

MBAG

For information on all MBAG events, call (478) 743-8612 or visit MBAG.org.

Mortgage Delinquencies inGeorgia Rise in Q2The delinquency rate for mortgage loans on residential properties inGeorgia was 10.11 percent at the end of the second quarter of 2012, anincrease of 36 basis points from the first quarter of 2012, according to theMortgage Bankers Association (MBA). The delinquency rate excludes loansin the process of foreclosure. The percentage of loans in Georgia on whichforeclosure was started during the quarter rose 16 basis points to 1.48percent, while the percentage of loans in the foreclosure process at theend of the quarter fell seven basis points to 3.04 percent.

These rates are not seasonally adjusted. Mortgage delinquency ratesnormally rise between the first and second quarters of the year due toa variety of seasonal factors. In addition, the percentage of loans in theforeclosure process is significantly affected by the foreclosure laws ofthe state. States with judicial foreclosure systems generally have high-er percentages of loans in foreclosure than do states with non-judicialsystems.

The delinquency rate for prime adjustable-rate mortgages (ARMs)increased 24 basis points to 8.88 percent and the rate for prime fixed ratemortgage loans increased 24 basis points to 5.41 percent. The delinquen-cy rate for sub-prime ARMs increased 96 basis points to 25.69 percent,while the rate for sub-prime fixed rate loans increased 99 basis points to24.76 percent. The delinquency rates for FHA and VA loans were 17.52percent and 8.53 percent, respectively—up 12 basis points for FHA loansand up 58 basis points for VA loans.

The foreclosure starts rate for prime ARMs in Georgia decreased 15basis points to 1.82 percent, while the rate for prime fixed rate loansdecreased five basis points to 0.79 percent. The foreclosure starts rate forsub-prime ARMs increased nine basis points to 3.97 percent, while therate for sub-prime fixed rate loans decreased four basis points to 2.67percent.

The percent of prime ARMs in foreclosure decreased 41 basis points to4.10 percent and decreased 14 basis points to 1.71 percent for primefixed rate loans. The rate for sub-prime ARMs decreased 45 basis pointsto 11.07 percent, while the rate for sub-prime fixed rate loans decreased39 basis points to 5.87 percent. The percentage of FHA loans in foreclo-sure increased 43 basis points to 4.68 percent. The percentage of VA loansin foreclosure decreased 20 basis points to 1.85 percent.

Among the 50 states and the District of Columbia, Georgia ranked sec-ond in delinquencies and second in foreclosures started. Mississippiranked first in delinquencies with a rate of 11.78 percent and Marylandranked first in foreclosure starts with a rate of 1.95 percent.

On a national level, the delinquency rate for mortgage loans on one-to four-unit residential properties was 7.35 percent on a non-seasonallyadjusted basis, up 41 basis points from 6.94 percent in the first quarterof 2012. The seasonally adjusted delinquency rate on residential proper-ties was 7.58 percent in the second quarter, up 18 basis points from lastquarter’s seasonally adjusted rate. The non-seasonally adjusted percent-age of loans on which foreclosure was started during the quarterremained unchanged at 0.96 percent, while the non-seasonally adjustedpercentage of loans in the foreclosure process at the end of the quarterdecreased 12 basis points to 4.27 percent.

SEPTEMBER 2012Tuesday, September 11

AMBA September LuncheonVilla Christina Restaurant 4000 Summit Boulevard

Atlanta11:30 a.m.-1:30 p.m.

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“The best thing about ACHL is Underwriting and closing department

turn times. I have never had eithertake more than 24 hours.”

Brian Slodki14 years in business

Bartlett, Illinois

“I’m very pleased that I chose ACHL. They understand the importance of

customer service and a team environment.The underwriting and closing departments

are responsive and quick. With our excellentmanagement, HR, and accounting team, we

have a family working together for a common goal – to Close More Loans!!”

Denise Alcorn20+ years in business

Monroe, Georgia

“I chose ACHL because of the people and service I get from everyone.

Also the selection of products I have access to. I am Finally back with

a great team of people.”

Steven J. Scarfo15 years in business

Morristown, New Jersey

“I really like this organization. My only regret is that I didn’t find

you sooner!”

Jim Patterson9 years in business

Houston, Texas

“ACHL’s has truly been a wonderful company to join. Response and turn timesare great. The communication and access

to anyone companywide all the way tothe top is almost immediate. You are truly

part of a family at ACHL.”-

Mark Silverberg23 years in business

East Brunswick, New Jersey

“After weighing my options I decided to gowith America’s Choice Home Loans. Thebranch compensations is one of the best in

the industry. They are committed toproviding extraordinary customer service.ACHL will help me grow my branch into a

mortgage powerhouse by equipping mewith their proven tools and systems.”

Simon Nwoke17 years in business

Macon, Georgia

“I joined America’s Choice Home loans be-cause I felt like I was joining a family.

They just jumped through hoops to get meon board and opened.

They give me the tools needed to help merun and grow my business.”

Renee Ralls33 years in business

Salem, Oregon

www.achlonline.com

Give Jonathan Fowler, Director of National Productionof America’s Choice Home Loans a call at

713-821-9750 to learn how you can have a better, more rewarding career

“You know the old saying ‘Your company isonly as good as your employees’ Jonny andhis team have proven that statement to be

true! I’ve had the pleasure to work withJonny and his team for over 10 years.

Once I had the opportunity to move andwork with him and his team again

I took it! It’s the right move!

David Velasquez15 years in business

Virginia Beach, Virginia

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A Special Look at “Wholesale & Correspondent”The Rationality of the Wholesale Lending Market By Mark Greco ....................................................................36Look for a Focus on Customer Service to Grow Your Business By Mat Ishbia ..............................................37Building a Better Wholesale Mortgage Banking Channel By John Walsh ........................................38The Future of the Mortgage Broker and Correspondent Markets (Part III) By Andy W. Harris, CRMS 39Wake Up Mortgage Wholesalers—Revisited By Dave Hershman ................................................................41Jumbo Lending in Today’s Environment By Brian Swanson ....42Who’s Who in the 2012 Wholesale Marketplace ..........44

FeaturesMarketing in 2012: September Brings in More Loans! The Mortgage Business is Back! ....................................4Lenders Who Confuse Credit Rescoring and Credit Repair Could be Violating Consumer Rights Under FCRA By Terry W. Clemans ..............................4Never Miss an Opportunity to Impress By Mike Cox ..........6The Federal Government’s Search for Mortgage Industry Whistleblowers By Brian M. Feldman Esq. ................8CFPB Proposes Rule on High-Cost Mortgages and Homeownership Counseling By Melanie A. Feliciano Esq. ....................................................10NAMB Perspective ..........................................................12What I Learned Through Social Media By Ken Pederson....14A Lending Institution’s Important Ally in a Challenging Market By Tom Delaney ..................................16We Don’t Always Need to Look Elsewhere for Executive Talent By Andrew Peters................................18Anti-Money Laundering Program: Preparation is Protection By Jonathan Foxx ......................22NMP Mortgage Professional of the Month: Jonny Fowler, Director of National Production, America’s Choice Home Loans By David J. Coster ............26Planting Our Flag By Al Crisanty ..........................................28ValueNation: Higher Standards Heighten the Integrity and Accuracy of Property Valuation By David Rasmussen ..30Q&A With HTL..................................................................32Regulatory Compliance Outlook: Elder Financial Abuse By Jonathan Foxx ............................46Don’t Answer Your Customer’s Questions! By Douglas Arnett..................................................................48

ColumnsHeard on the Street..........................................................6NMP News Flash: August 2012 ......................................16New to Market ................................................................30NMP Mortgage Professional Resource Registry ..........49NMP Calendar of Events ................................................52

Visit Our

ADVERTISERS

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America’s Choice Home Loans .......................... www.achlonline.com ....................................GA5 & 9

Calyx Software ................................................ www.calyxsoftware.com ......................................19

CBC National Bank .......................................... www.cbconnex.com ......................Inside Back Cover

Document Systems, Inc./DocMagic .................... www.docmagic.com ............................................21

FindMortgageJobs.com .................................... www.findmortgagejobs.com ..........................31 & 40

First Guaranty Mortgage Corp. .......................... www.fgmcwholesale.com ......................................17

Frost Mortgage Lending Group .......................... www.frostmortgage.com/nmp ..............................42

Guaranteed Home Mortgage Company .............. www.joinGHMC.com ............................................27

Hometown Lenders .......................................... www.whotookmybacon.com ......................GA6 & 29

Icon Residential Lenders, LLC ............................ www.iconwholesale.com ......................................11

LoanMarq ........................................................ www.loanmarq.com ............................................15

Meadowbrook Financial Mortgage Bankers Corp..... www.mortgagesalesjob.com ..................................43

Menlo Park Funding ........................................ www.menloparkfunding.com ................................31

Mortgage Brokers Network Corp, Inc. ................ mortgagebrokersnetwork.com ..............................25

NAPMW .......................................................... www.napmw.org ..................................................20

NAMB NATIONAL ................................................................................................................GA7 & 35

NRMLA ............................................................ www.nrmlaonline.org ..........................................47

PB Financial Group Corp. .................................. www.pbfinancialgrp.com ......................................19

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

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

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

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

Veros .............................................................. veros.com ..........................................................19

National Mortgage Professional Magazine

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MAGAZINE

NMPNMPAugust 2012 Volume 4, Number 8 Company Web Site Page

From The Publisher’s DeskAugust 2012Volume 4 • Number 8

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

Web site: NationalMortgageProfessional.comSTAFF

Eric C. PeckEditor-in-Chief

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

Joel M. BermanPublisher - CEO


David CosterSenior Editor

[email protected]

Joey ArendtArt Director

[email protected]

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

[email protected]

Beverly KoondelNational Account Executive


Tara CookBilling Coordinator


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

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

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

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

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

National Mortgage Professional Magazine, NAMB, NAPMW, NCRA,and/or other state mortgage trade associations do not make any misrepre-sentations or warranties concerning the regulatory and/or complianceaspects of advertisers, products or services and/or the editorial content con-tained in NMP Media Corp. publications. National Mortgage ProfessionalMagazine and NMP Media Corp. reserve the right to edit, reject and/or post-pone the publication of any articles, information or data.

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The stagecoach departsThis month, we take a look at the wholesale and correspondent markets, and it couldn’t comeat a better time. On July 13th, Wells Fargo became the latest big bank lender to no longer fundloans originated by independent mortgage brokers by announcing “it will discontinue fundingmortgages that are originated, priced and sold by independent mortgage brokers ...”Abandoning wholesale brokers with one day’s notice—an origination channel that reportedlygenerated $3 billion per month in volume for the company—Wells claimed in the same pressrelease that this action was taken “on its own volition” and “not part of the U.S. Departmentof Justice “settlement,” the subject of which was DOJ’s allegation that “borrowers … were

adversely impacted by mortgages priced and sold by independent mortgage brokers through its Wholesale Channel”.I remember so clearly how Wells Fargo actively pursued the very mortgage broker originations for many years

that they were now abandoning, and while not connecting the dots in the press release, the company certainlyimplied and questioned the pricing and credibility of the mortgage broker community. The Wells Fargo stage-coach was schlepped to many an NAMB Annual Conference and meticulously assembled their premium-placedquad exhibit booth at the entrances to the conferences. To link the DOJ settlement announcement with theirfleeing the independent mortgage broker in the same press release is an insult to the mortgage brokers theyonce claimed to appreciate.

Attempts by National Mortgage Professional Magazine and other media outlets to get documentation fromWells Fargo in support of its action have gone unanswered. The final nail in their assault on mortgage brokerswas giving just a 24-hour notice from the date of the press release to the date the wholesale channel would beclosed to independent mortgage brokers!

This weekend, I decided to take the mini replica of the Wells Fargo stagecoach I received some years back ata NAMB National Convention and sell it at my garage sale. I hope the price I independently placed on it will notresult in any repercussions from Well Fargo. It sold for .50 cents.

Luckily, as the stagecoach departs, the void created continues to be filled by wholesalers that continue toappreciate and respect the role that mortgage brokers represent in residential mortgage originations. As report-ed in the latest employment statistics, growth in employment in the mortgage sector, especially in the mortgagebroker segment, is on the rise.

In this issue you will see the many wholesale lenders in our “Who’s Who in the 2012 Wholesale Marketplace?“section on page 44. These lenders deserve the support of the mortgage origination sector for their commitmentto the wholesale channel. The mortgage broker has suffered for years, wrongly blamed as the culprits of thehousing crisis by the media and state and federal legislators. Fortunately, the wholesale lenders that looked pastthis erroneous depiction have been served well by, the mortgage brokers placing their loan originations throughthem, while also the multitudes of consumers have benefited by relying on those very mortgage brokers.

At the end of the day, I’m glad to see the stagecoach leave town, as I watch those who remain in town showtheir love and respect for the hard-working independent mortgage broker. It is that very independence whichgives consumers a true opportunity to experience competitive pricing!

Eminent domainMedia attention recently has been directed at the “eminent domain” proposal, or as it has been titled by oppo-nents, the “property seizure program,” being contemplated in California’s County of San Bernardino, along withthe cities of Fontana and Ontario.

This answer to properties that are underwater is out of a book someone must have written titled How CanYou be Sure Investors Won’t Invest in Mortgage Back Securities.

This concept has captured both media attention and other municipalities across the US and if it ever gatherstraction, it would threaten the future of the mortgage-backed securities (MBSs), resulting in government intru-sion in the marketplace, further removing underwriting decisions from the lender and relegate it to government.

The plan is simple, but the potential for disaster is great. Eminent domain would be used to “condemn under-water mortgages” (not properties). The mortgages of non-agency, underwater properties would be re-set to thelower current market value and re-securitized at the lower value. This concept, added to the myriad of failedattempts to deal with underwater properties, belongs in what I call the “Hall of Shame.”

Why would investors be expected to continue to invest in MBS, if their potential for loses would be so greatin the event that the eminent domain concept becomes a reality. The domino effect on the counties adoptingthis “eminent domain” treatment of underwater mortgages would be a further “downgrade” of the counties asviable investments and further erode the willingness of investors to invest.

We must hope that this use of eminent domain has not only captured the attention of the media, but alsothat of the decision-makers, those who hope to actually make this a reality, realize the serious outcomes theirplan can cause. The unintended consequences and moral hazards of this poorly conceived concept could fillmore pages than this publication would have room to enumerate.

So, let’s put that “fantasy” book I referred to back into the library and then shred it!We need solutions, not more problems. Eminent domain works for government to acquire properties to build

something for the benefit of the masses, not for destroying our collective futures.I hope you enjoy yet another issue of National Mortgage Professional Magazine as we prepare to depart the

third quarter and enter the final months of 2012. Each month we supply the tools and ideas to take your busi-ness to another level. Are you taking advantage of these tools? If not, now is the time to refresh your knowledgebase and utilize the ideas and thoughts in our pages and implement them into your day-to-day operations.

Sincerely,

Joel M. Berman, Publisher - CEONMP Media Corp.

National Mortgage Professional Magazineis published monthly by NMP Media Corp.

Copyright © 2012 NMP Media Corp.

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The Association of Mortgage Professionals

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

Web site: www.namb.org

President—Donald J. Frommeyer, CRMSAmtrust Mortgage Funding Inc.200 Medical Drive, Suite DCarmel, IN 46032(317) 575-4355 � [email protected]

Vice President—Donald Fader, CRMSSMC Home FinanceP.O. Box 1376Kinston, NC 28503-1376(252) 523-5800 � [email protected]

Treasurer—John Councilman, CMC, CRMSAMC Mortgage Corporation2613 Fallston RoadFallston, MD 21047(410) 557-6400 � [email protected]

Secretary—Olga Kucerak, CRMSCrown Lending222 East Houston, Suite 1600San Antonio, TX 78205(210) 828-3384 � [email protected]

Past President—Jim Pair, CMCMortgage Associates Corpus Christi6262 Weber Road, Suite 208Corpus Christi, TX 78413(361) 853-9987 � [email protected]

Rocke Andrews, CMC, CRMSLending Arizona LLC1996 North KolbTucson, AZ 85715(520) 886-7283 � [email protected]

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

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

Andy W. Harris, CRMSVantage Mortgage Group1596 SW Boones Ferry Road, Ste. 100Lake Oswego, OR 97035(503) 496-0431 � [email protected]

Deb Killian, CRMSGMAC246 Federal Road, Unit C-24Brookfield, CT 06804(203) 778-9999, ext. 103 � [email protected]

Linda McCoyMortgage Team 1 Inc.6336 Picadilly Square DriveMobile, AL 36609(251) 610-0494 � [email protected]

John StevensBank of England d/b/a ENG Lending11650 South State Street, Ste. 350Draper, UT 84120(801) 427-7111 � [email protected]

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

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

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

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

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

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

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

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

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

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

Terry ClemansExecutive Director(630) [email protected]

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

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

President-ElectJill Kinsman(206) [email protected]

Senior Vice PresidentChristine Pollard(607) [email protected]

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

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

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

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

SecretarySara Vasura(703) [email protected]

TreasurerJeanne Evans, CME(918) [email protected]

ParliamentarianHulene Works(972) [email protected]

NAMB 2012-2013 Board of Directors

National Association of ProfessionalMortgage Women

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

Web site: www.napmw.org

OFFICERS

DIRECTORS

2012 Board of Directors & Staff

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

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

National Board of Directors 2012-2013

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Marketing in 2012: September Brings in More Loans!The Mortgage Business is Back!

Things you should knowgoing into the fall quarter of 2012

The Federal Housing Administration (FHA) and Home Affordable Refinance Pro-gram (HARP) are the two big names in the industry. Use them! They are workinggreat and generating some big waves in the business.

Mortgage rates are holding at all-time lows. Quit asking about whether they aregoing back up and get back to work! Make hay while the sun is shining! Mortgagerates have been dropping fairly steadily since 2002. Fact … they are going back up.We just don’t know when. So keep those files closing in the meantime.

FHA delinquencies are on the rise. This means we need to get as many peoplerefinanced as possible right now. Get them out of FHA if it makes sense. If not, dolike everyone else does and streamline them. If FHA goes away, we’re going to bein a lot worse shape as a country, not just an industry.

How to prepare yourself:

Plan—set yourself some goalsSet them with dates and actually hold yourself accountable to attaining them. Thenumber one reason mortgage professionals fail in the business is because they stopgrowing when the business is booming. The big mortgage shops grow and declinewith the market but their trends are always up. This is due to riding market con-ditions while continuing to grow despite them.

Research—find other products to offerMost loan officers CAN sell a whole bunch of loan types but only DO sell FHA, HARPor some niche that they’ve been selling for years. Well … it’s time to diversify. There areplenty of loan products out there and the people that are closing more loans than youevery month are offering more loan products too. Find out what your competitors aredoing to beat you every month and start doing that. Then find out what they are miss-ing and do that too! Business is often referred to as war for this reason.

Market yourself and your businessCall a marketing company to find out what is working. Marketing firms are themost under used and fantastic way to stay on top of market conditions. They al-ways tell you what is working, and they have a good grasp on the state of the en-tire nation, not just your region. Lean on them, that’s what you pay them for. Spendsome time and money getting your name out there. If you are not picking up fiveto 10 new leads per week, you are missing the boat. Many companies are supply-ing their loan originators with hundreds of leads per month. If you can close theseleads at a rate of 10 to 15 percent, you are in for a real good month.

Here are a few key reasons that successful mortgage professionals don’t make it …What no to do� Stop marketing: Don’t think you cannot market yourself because you are too

small or too large. It’s basic math … you close at 10 percent with 100 leads permonth. That’s 10 closed deals per month!

� Stop preparing for growth: As you read this, thousands of people are thinking aboutturning down their marketing budget because business is booming. “I cannot handleanymore!” they say. You’ve probably said it before to someone else as you chucklethinking of what a great month you are having. What about next month? What if ratesgo back up? What if HARP goes away? Plan for the worst and hope for the best.

� Stop hiring: Hiring is a big part of growth in any industry. You don’t want to beprocessing your own files do you? Do you want to be answering the phonestoo? Hire people to do this for you and get back to what you do best. Help peo-ple get into the right loan product for their situation.

� Stop growing: In business, there is growth and there is decline … no in-between.

Medford, Ore.-based TagQuest is a full-service marketing firm created specifi-cally for the ever-changing business world. TagQuest assists companies with theirdirect marketing, advertising and branding needs, and knows what it takes togenerate quality customers and, most importantly, how to retain those customersfor years to come. TagQuest brings forth a unique opportunity to utilize our ex-perience and expertise in varying consumer sales and marketing environments.For more information, call (866) 376-5540 or visit Tagquest.com.

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Lenders Who Confuse CreditRescoring and Credit RepairCould be Violating ConsumerRights Under FCRA

By Terry W. Clemans

Some lenders have issued restrictions regarding the useof credit rescoring by mortgage originators, confusing theservice with credit repair schemes. These lenders do nothave a clear understanding of the major differences inthe two programs and this lack of understanding bringswith it the risk of litigation, as these lenders are pro-

hibiting a consumer from the ability to obtain an accurate credit report fortheir mortgage loan.

There are major differences between credit rescoring and credit repair.First and foremost credit rescoring is a program developed in conjunctionwith and is processed through the three national credit repositories. Thecompanies that provide rescoring are credit reporting companies asdefined by the Fair Credit Reporting Act (FCRA) as “resellers” and have legalobligations to both the creditors and the consumers for the reports thatthey issue. That includes the reports that contain rescored credit accountsor trade lines, which they issue to the lenders and upon which the lendingdecisions are based.

The changes on such a report are made via the rescoring process andhave been verified twice for their accuracy. The changes are verified onceby the reseller providing the rescoring service, and then again by thenational credit repository from which the rescored trade line was original-ly reported. Upon the completion of the second verification, the data inquestion is changed at the repository level, a new credit report is accessedwith new score calculations made with the new data, completing theprocess. This all happens in about two to three days as the rescoringprocess puts everything into a rush status by all involved.

In contrast, credit repair firms cannot access the repository data direct-ly, do not have the ability to interface with the bureaus directly. They filedisputes via the basic consumer model and are not consumer reportingagencies that can issue a credit report with their information on it. Manycredit repair firms do not even operate with their real name, as most ofthese firms operate in a fashion that is legally questionable. Federal TradeCommission (FTC) personnel have reported that they have never seen alegitimate credit repair firm and the Commission has a long history ofactions against them. Several state attorneys general offices have takenactions against credit repair firms also for their questionable tactics.

When lenders mistake these two services and take a position that creditreports that have been rescored do not qualify for underwriting, they havetaken a position that may violate the consumers’ rights. Credit rescoring is oneof several options provided to consumers who dispute the accuracy of anitem(s) on their credit report. The FCRA requires credit reporting agencies,both the national repositories and resellers, to process these disputes, sowhen a lender puts limitations on a consumer’s ability to obtain a rescore,they are actually inhibiting the consumer’s ability to process a dispute intimely fashion to have accurate data considered for their mortgage loan.

The lender with this position is basically telling the consumer in themortgage process who is seeking to have an expedited processing of a dis-pute to correct some incorrect data on their credit report that they can’thave it corrected for that loan application. I have heard from lenders whohave taken this path and they are claiming they are trying to protect them-selves from consumers “gaming” the system for better rates. Whenrescored, credit reports have had the accuracy of the data checked twicebefore changing it, I am not sure who the consumer can “game” the sys-tem by requesting accurate data be evaluated.

Looking at the situation from another perspective is that the lender is “gam-ing” the consumer, trying to deny their access to accurate data and force theminto higher interest rates than they would otherwise qualify for if their reportwas accurate. It appears that an entity is indeed being gamed and it is the sys-tem itself; however, it is not the consumer doing the “gaming” and thereshould be no surprise when a legal action is filed regarding it.

Terry W. Clemans is executive director of the National Credit ReportingAssociation Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail [email protected].

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Lenders ComplianceGroup Integrates RiskAssessment SolutionFrom Veros

Veros Real EstateSolutions (Veros)has announced

that Lenders Compliance Group will beutilizing its collateral integrity analysis(CIA) product for pre-funding and post-closing audits, early payment defaults,high default due diligence, as well aswarehouse bank and portfolio reviews.One of the most comprehensive riskreports available, CIA utilizes the latesttechnology to analyze, detect and accu-rately identify high-risk transactionswhile minimizing costly false positives.The solution aggregates multiple datasets from an extensive range of vendorsto provide the necessary information toevaluate risk exposure into a singlereport that is both easy to read and use.

“We are pleased to integrate CIA withLenders Compliance Group in order togive them the highest level of risk andfraud analysis for their clients,” saidDavid Rasmussen, senior vice presidentof operations for Veros. “This toolenables their loan analytics group toinstantly measure the various risksassociated within a transaction. It willreplace the need to leverage multipledata sources and immediately strength-en their level of mortgage compliance.”

Lenders Compliance Group focusesexclusively on regulatory complianceissues that directly affect residentialmortgage loans and actively monitorslaws and regulations in the industry.Clients include mortgage bankers,mortgage brokers, mortgage REITs,banks, credit unions, correspondentand wholesale lenders, servicers, andwarehouse banks, among others.

“The collaboration between Verosand Lenders Compliance Group is time-ly for my firm, inasmuch as we havesought to implement a reliable technol-ogy that provides statistically significantdata about collateral valuation,” saidJonathan Foxx, president and manag-ing director of Lenders ComplianceGroup. “For instance, clients retain usto provide a better understandingabout loan performance and remedialaction, and Veros’ CIA solution enablesus to combine unique valuation find-ings with our own loan analytics andregulatory reviews.”

The market-proven metrics found in

CIA provide a comprehensive snapshotof market conditions and includes asubject risk score, market risk score,and collateral integrity score.

Rick Butera to Head New REMN Branch in Garden State

Real EstateM o r t g a g eNetwork Inc.

(REMN) has announced the opening ofits latest New Jersey office in Bayville,N.J. Headquartered in Edison, N.J.,REMN has been in business more than20 years and is known throughout thehousing industry for its commitment tocustomer service and quality in themortgage process. In conjunction withthe new Bayville office, REMN has alsohired mortgage veteran, Rick Butera, asthe office’s branch manager.

Butera is a New Jersey native andcomes to REMN with 20-plus years ofmortgage industry experience, includ-ing extensive familiarity with helpingthe self-employed navigate the detailedsteps they need to take in order tosecure home financing. With expertisein primary, second home mortgagesand jumbo mortgages for luxury prop-erties, Butera and his team are wellsuited to help buyers finance homes inand around the Jersey Shore, includingareas such as Long Beach Island,Lavallette, Manasquan, as well asinland New Jersey and Pennsylvania.

“REMN is one of the largest, inde-pendently owned mortgage firms in thecountry. They have been doing businessin New Jersey for more than 20 yearsand truly understand the unique situa-tions home buyers experience acrossour area,” said Butera. “In all of myyears in the lending industry, I havenever seen a company more committedto both speed and quality in the mort-gage world. Whether someone is look-ing for a vacation home or to relocateto the area, REMN has mortgage prod-ucts to suit every buyer.”

REMN currently has more than 800associates in more than 40 retail officeslicensed to originate loans across thecontinental US, in addition to theironline consumer direct division, which isdoing business as FinanceMyHome.com.In 2011 alone, REMN closed more than$2.3 billion in home loans, solidifyingits position as one of the largest inde-pendent non-bank lenders in the U.S.

Never Miss an Opportunityto Impress

By Mike Cox

Finding an edge for your business in today’s market usually fo-cuses on adding a new technology, system or application.Mortgage industry participants spend hours on Webinars, con-ference calls or watching videos of the latest and greatest thatwill change your business for the better and finally allow you

to take the weekend off. The fact is even with all the widgets and wadgets, gidgets and gadgets, the

truly successful business models still focus on three fundamental principles:Organization, service and engagement. When the three fundamentals areworking well in your business, your clients feel it, your referral partners feel itand you feel it. We felt it too, when we built LoanMarq.

LoanMarq is designed by mortgage professionals for today’s marketplaceas a simple engagement platform to organize and communicate with yourclients and transaction participants and provide the “knock your socks off ”customer service that you only see in commercials.

We love mortgage loan processors. There it is … we said it … and you knowit’s true that the mortgage processor plays a key role in the mortgage transac-tion that in many cases make or break your deal. They work hard, stay late.They are the magic behind the scenes that gets it done when it needs to bedone. We know you cannot live without them. We also know is that they needhelp. No matter how dedicated, organized and efficient they are, there neverseems to be enough hours in a day to get it all done.

Automate the loveIf you had the chance to personally call every client, every day during theirtransaction, you would. It would be great customer service, you would almostnever lose a client and all mortgage catastrophes would be avoided throughconstant communication. You would if you could inform every referral part-ner of the status of the transaction that they have entrusted to you. You wouldalso ask for another. No, we will not pretend that LoanMarq will make thosecalls for you, because it will not. What it will do is send customizable status e-mails and text messages to everyone involved in the transaction when mile-stones are reached. We have a bunch of teenagers in the back room just sendingout texts at 90 words per minute. Just kidding... The smartphone interface isjust about complete and every angle will be covered.

NOT one size fits allYes, LoanMarq does come in extra medium! You can customize just aboutevery part of the system. From the interface branding to the process configu-ration, emails, and text alerts LoanMarq can be reshaped to fit your business.It is not our goal to change what you do or how you do it. It is our goal to offera tool that can automate and increase the effectiveness of your engagement.

Protect your eggsYou know what I mean! Your business means something to you. It takes time, ef-fort and money to yield transactions. Not every strategy works the first time or everytime. We have all lost deals to competitors and think back to the gaps in service orcommunication that allowed for that transaction to be taken from us. LoanMarq willhelp you close the gaps. Having an air-tight engagement platform will keep you infront of your clients when you need to be, answer questions before they are askedand keep competitors from exploiting a moment of doubt or indecision.

Turn your business into more businessWe all talk about it and LoanMarq helps you do it. By engaging the client at ahigh level, they are more likely to send you additional business at the most op-timal time (that is during the transaction). Real estate agents will naturallysend you more business due to your high level of engagement. Simply put.Your level of service makes them look good.

Mike Cox has been active in the mortgage industry for more than 12 years. Heis currently a mortgage sales consultant and strategist working with companiesacross the country, films a daily video blog educating consumers called “Rates InMotion” and is also an owner and chief executive officer of Quality Lender Serv-ices (QLS). LoanMarq is a software application than was acquired and enhancedby QLS in 2012. If you would like to contact Mike, he may be reached directly bye-mail at [email protected] or call (800) 705-7921.

Sponsored Editorial

7


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validate the information the consumeris providing. Our goal is to improve thequality of the leads our lender is receiv-ing, and empower the consumer tomake the smarter decision. Mortech’sPPE will help us with that.”

Lendage uses Marksman’s pricingengine for a quicker turnaround timeand can offer expanded loan options tocustomers. They power a number ofWeb sites across the Internet, providingmortgage loan information where con-sumers are most likely to search for it.When a consumer interacts with thecompany’s online tools, Lendageattempts to determine whether the con-sumer is a real mortgage borrowerready to buy a loan. Lenders that useMarksman can then pull those loans

into the system and complete the pre-qualification and entire lock processusing Marksman’s secondary desk tools.

PRMG Expands ItsWholesale Operations inColorado

P a r a m o u n tR e s i d e n t i a lMortgage Group( P R M G ) h a s

announced the recent expansion oftheir wholesale operations into thestate of Colorado. The Colorado territo-ry will be headed up by Cindy Broadduswho has recently been promoted toregional manager. Broaddus, who was

continued on page 10

LPS Acquires LOSProvider LendingSpace

Lender ProcessingServices Inc. (LPS)has announced itsacquisition of Lend-

ingSpace, a provider of mortgage loanorigination software solutions. TheLendingSpace technology platform willaugment LPS’ other origination technolo-gy solutions, which include Empower, aplatform used by mortgage lenders withcomplex system configuration and cus-tomization needs; and PCLender, which isused by mortgage lenders, credit unionsand community banks that leverage morestandardized technologies.

“The addition of LendingSpace’srobust capabilities expands the numberof innovative origination solutions weoffer lenders,” said Jerry Halbrook, LPS’senior managing director of LPSOrigination Technology Solutions. “Weevaluated a number of lending plat-forms and LendingSpace provided thebest product features with the neces-sary scalability to expand our productsuite. More importantly, LPS andLendingSpace share a common com-mitment to excellence, integrity andcustomer dedication.”

The LendingSpace product suite fea-tures a correspondent lending platformincluding full Web-enabled capabilitiesto enhance collaboration betweenretail originators and their correspon-dent lending partners. These capabili-ties include loan registration, data anddocument integration, status, conditionmanagement, funding and secondarymarket and investor delivery capabil-ities, which are critical to the successof correspondent lenders. TheLendingSpace product suite also fea-tures robust lead management capabil-ities, reverse mortgage product capabil-ities and extensive third-party vendorintegrations. All LPS origination sys-tems, including the LendingSpace prod-uct suite, will also incorporate LPS’ LoanQuality Gateway to assist originatorswith their loan quality requirements.

“LPS is deeply respected throughoutthe mortgage industry for its highly suc-cessful technology and expertise,” saidRavi Varma, chief executive officer ofLendingSpace. “By combining thestrengths of LendingSpace and LPS, wecan better help mortgage professionalsmeet the complex challenges of today’slending environment.”

Mortech and LendageComplete Integration

Mortech Inc. hasfinalized an inte-gration with Lend-

age, a division of Bills.com, whereLendage will benefit from Mortech’sProduct and Pricing Engine. Leads thatlenders acquire through Lendage canbe seamlessly imported into theMarksman lending management plat-form.

“Successful lenders are securingmortgage leads from many sources andthen counting on Marksman to sort outthe deals that can close from those that

shouldn’t even get to the LOS,” saidMortech Inc. president Don Kracl.“Lendage is a provider of quality leadsthat are already partially qualified. Thistight integration with Marksman willcomplete that process, moving real bor-rowers through the system quickly andinto the LOS, allowing loan officers tobe much more effective.”

Ethan Ewing, president of Bills.com,which owns and operates the Lendageplatform, compares this business tothat of travel industry online serviceKayak.

“Searching for a home loan on onelender’s website will frustrate borrow-ers,” said Ewing. “They want to shoplike they shop for airline tickets. On theother side, we employ technology to

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By Brian M. FeldmanEsq.

On Aug. 5, 2011, sixmonths before shereceived her $31 mil-lion reward, SherryHunt quietly filed awhistleblower action

against her employer, CitiMortgage. Hunthad been a quality control (QC) managerat CitiMortgage since 2008, coveringFederal Housing Administration (FHA)-insured mortgages. She had been in themortgage industry for nearly her entirecareer, spanning over three decades. Inher complaint, Hunt described mortgagesthat CitiMortgage’s Direct Endorsementunderwriters should not have certified aseligible for FHA mortgage insurance, butwhich the underwriters certified anyhow.She also described problems within herQC department, including CitiMortgage’sfailure to review early payment defaults.Her action was immediately sealed by theCourt, and remained secret until Feb. 15,2012.

According to a Reuters story, Huntnever intended to become a whistle-blower, but she grew frustrated withCitiMortgage’s response to her com-plaints, which she made internally.Hunt said that she reported all of theseproblems up the chain, through humanresources and ethics, and that nothingmore than a cursory investigation tookplace. No one told her she had her factswrong. Yet, no one told her she wasright, and that things were goingto change. Instead, she feltthat CitiMortgage was pres-suring her and her QC staffto overlook defects. Shespoke with an attorney,and together, they puther story into a com-plaint, and brought itto the attention of theU.S. Department ofJustice.

In the six months

between August 2011-February 2012,the Justice Department looked intoHunt’s sealed complaint and negotiatedits resolution with CitiMortgage. As aresult, Hunt was completely vindicated.On Feb. 15, 2012, the Justice Departmentannounced that CitiMortgage had admit-ted responsibility for improperly endors-ing loans for FHA mortgage insurance andfor failing to review all early paymentdefaults, just as Hunt had alleged.Moreover, CitiMortgage paid a very largesum of money to the Government to settlethese claims. Hunt, for her part, walkedaway with a reward of more than $31 mil-lion in cash. Over thecourse of just sixmonths, Hunt’sf r u s t r a t i o n sabout her em-ployer ignor-ing her con-ce rns hadtransformedH u n t — aMissouri sub-urbanite, liv-ing just out-side St. Louis—into a million-aire, 30 timesover.

Hunt’s story haslessons for the mort-gage industry andfor mortgage

professionals. For the industry, the les-sons include that there is enormousexposure for errors in the mortgageunderwriting process, and that it is per-ilous to ignore employee concerns. Formortgage professionals, the lesson isthat, even if your employer is not inter-ested in listening to your concerns, thefederal government may be. And therewards may be tremendous.

Who can be a whistleblowerIt is important for companies andemployees to understand that nearly

anyone with inside informationabout a company’s practices

could potentially be awhistleblower. There are

various federal lawsand programs in placeto encourage individu-als (or entities) to stepforward and reportproblems to the federal

government. By far, themost significant hasbeen a federal law dat-ing back to the Civil War

era, called the FalseClaims Act.

U n d e rthe

False Claims Act, persons or entities may bewhistleblowers if they are the first to stepforward and report misconduct (that is,before the government or media discoverthe issues), or, even if they are not the first,if they have additional information thatcould help the Government make a case.These rules mean that company insiders,at almost any level, may be well positionedto become whistleblowers.

In the mortgage industry, the list ofpotential whistleblowers is long. QC profes-sionals, like Sherry Hunt, obviously fit thebill. Those professionals might include any-one in the QC process, whether within amortgage lending firm or outside the firm,including contractors. Along with QC profes-sionals, underwriters—especially directendorsement underwriters—may also haveinside information useful to the govern-ment. Executives could be great whistle-blowers as well from the government’s per-spective, as they may have knowledge of thefinancial incentives in place to encouragereckless lending practices or the extent towhich a company ignored promises it madeto government insurance programs, like theFederal Housing Administration (FHA).

In other words, when thinking aboutwho could become a whistleblower, it isimportant to brush aside any precon-ceived notions: In the mortgage indus-try, people at all levels, inside and outside

of a mortgage lending firm, may haveinformation that the government

might need to bring a case, andany of those people could

become a whistleblower.For this reason, it is vitalthat lenders seriouslyinvestigate complaintsat all levels, and thatem-ployees, from theexecutive suites inManhattan, to the satel-

lite offices throughoutthe country, recognize that

they may have the power tobecome a whistleblower.

The Federal Government’s Search for

MortgageIndustry

Whistleblowers

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“The best thing about ACHL is Underwriting and closing department

turn times. I have never had eithertake more than 24 hours.”

Brian Slodki14 years in business

Bartlett, Illinois

“I’m very pleased that I chose ACHL. They understand the importance of

customer service and a team environment.The underwriting and closing departments

are responsive and quick. With our excellentmanagement, HR, and accounting team, we

have a family working together for a common goal – to Close More Loans!!”

Denise Alcorn20+ years in business

Monroe, Georgia

“I chose ACHL because of the people and service I get from everyone.

Also the selection of products I have access to. I am Finally back with

a great team of people.”

Steven J. Scarfo15 years in business

Morristown, New Jersey

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you sooner!”

Jim Patterson9 years in business

Houston, Texas

“ACHL’s has truly been a wonderful company to join. Response and turn timesare great. The communication and access

to anyone companywide all the way tothe top is almost immediate. You are truly

part of a family at ACHL.”-

Mark Silverberg23 years in business

East Brunswick, New Jersey

“After weighing my options I decided to gowith America’s Choice Home Loans. Thebranch compensations is one of the best in

the industry. They are committed toproviding extraordinary customer service.ACHL will help me grow my branch into a

mortgage powerhouse by equipping mewith their proven tools and systems.”

Simon Nwoke17 years in business

Macon, Georgia

“I joined America’s Choice Home loans be-cause I felt like I was joining a family.

They just jumped through hoops to get meon board and opened.

They give me the tools needed to help merun and grow my business.”

Renee Ralls33 years in business

Salem, Oregon

www.achlonline.com

Give Jonathan Fowler, Director of National Productionof America’s Choice Home Loans a call at

713-821-9750 to learn how you can have a better, more rewarding career

“You know the old saying ‘Your company isonly as good as your employees’ Jonny andhis team have proven that statement to be

true! I’ve had the pleasure to work withJonny and his team for over 10 years.

Once I had the opportunity to move andwork with him and his team again

I took it! It’s the right move!

David Velasquez15 years in business

Virginia Beach, Virginia

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heard on the street continued from page 7

formerly the Las Vegas branch manager forPRMG, has been with company now formore than four years and has been active-ly involved with every function, from salesto operations including, underwriting anddocs. Along with Sales Manager CoreyJohnston, Broaddus is highly dedicated togrowing the broker base, while overseeinga full service fulfillment operations centerthat will be underwriting and fundinglocally, including generating business with-in the state of Colorado.

Broaddus is originally from Coloradoand started her career in the mortgageindustry back in 1974. Both she and herhusband Gary have been actively involvedin the broker community since the early1980s.

“We are very confident in CindyBroaddus heading up operations inColorado,” said PRMG CEO Paul Rozo.“Again, as part of our global vision andstrategic growth plan, the recent addi-tion of the Colorado territory compli-mented by the previous acquisition ofthe Northeast and Southeast regionswill allow us to remain on coursetoward expanding our overall footprintacross the country and ultimately posi-tion PRMG as a national player.”

LendingQB ContinuesExpansion With Strong Q2

LendingQB, a provider of seamless Web-based mortgage lending technology, hasannounced that it had a strong secondquarter, signing 12 new clients, which areeither already in production or in the midstof implementation. New clients includemortgage bankers, community banks andcredit unions, illustrating the platform’sability to serve all types of mortgage lend-ing institutions.

Customers that are in production withLendingQB’s end-to-end loan originationsystem (LOS) report that they have beenable to immediately eliminate the need formultiple systems, cut technology costs byup to 50 percent and reduce the cost tooriginate loans by as much 30 percent.LendingQB has accomplished these goalsby emphasizing a seamless workflow thateliminates non-value added activitiesthrough automation. Examples of thisinclude automated underwriting, businessrule automation and lights-out integra-tions to select third-party vendors.LendingQB unifies all mortgage lendingactivities on a single database of record,enabling higher level functions such asrapid generation of management reportsand internal communication. The entireplatform is Web-based and accessedthrough a common Web browser, makingit highly scalable and extremely efficient todeploy.

“We’re seeing a rapid growth in ourpipeline since we introduced LendingQBlate last year,” said Binh Dang, president ofLendingQB. “There’s a real movement

among mortgage lenders to switch theirLOS platforms. Dissatisfaction with serviceand the uncertainty of the longevity oftheir vendors are part of the reason. Butthere’s also a real desire for technologyadvancement; lenders are treating theirbusiness in a more sophisticated manner,especially in regards to quality control andbusiness analytics. They want a level oftechnology sophistication that matchestheir desire to grow efficiently as the mort-gage industry recovers. We’re glad thatthese new clients recognize the value webring to their business.”

LendingQB’s platform is comprised ofLO, TPO, and consumer direct point-of-saleWeb portals for all lending channels; thePriceMyLoan pricing engine and automat-ed underwriting system (AUS); loan pro-cessing; electronic documents, closing;secondary marketing; and interim servic-ing. All functions are incorporated into aseamless workflow. Another unique differ-ence is that the LendingQB LOS incorpo-rates business intelligence (BI) and dataanalytics functionality along with detailedreporting that helps lenders locate andtranslate their data into actionable infor-mation, enabling them to make informedbusiness decisions that establishes a com-petitive advantage and leads to greaterprofitability.

Interthinx EarnsSecureInfoRecommendation forGovernment Certification

Interthinx has earned a NationalInstitute of Standards and Technology(NIST) certification recommendationfrom SecureInfo for two of its automat-ed products for the residential mort-gage markets. SecureInfo subjectedboth FraudGUARD and PredProtect toextensive review to determine that theproducts meet the stringent securityrequirements of the NIST.

“We are particularly pleased that asan independent third party serving asan Agent of the Certification Authority,SecureInfo recommends that bothFraudGUARD and PredProtect be issuedan Authorization to Operate,” said MikeSmith, chief technology officer andchief architect for Interthinx.

“Interthinx takes great pride in itssecurity measures and stands ready towork with government agencies to helpmitigate risks through improved dataintegrity and compliance,” said KevinCoop, president of Interthinx.

ServiceLink Announcesthe Acquisition of DRIManagement Systems

ServiceLink hasannounced the

acquisition of Newport Beach, Calif.-based


Sponsored Editorial

By Melanie A. Feliciano Esq.

On July 9, the Consumer Financial Protection Bureau (CFPB) published aproposed rule to implement Dodd-Frank Wall Street Reform and ConsumerProtection Act amendments to the Truth-in-Lending Act (TILA) that expandthe types of mortgage loans that are subject to the Home Ownership and

Equity Protection Act of 1994 (HOEPA), revise and expand the triggers for HOEPA coverage, andimpose additional restrictions on HOEPA loans. In addition, this proposed rule implementsDodd-Frank amendments to TILA and the Real Estate Settlement Procedures Act (RESPA) thatimpose requirements governing homeownership counseling.

HOEPASections 1431 through 1433 of Dodd-Frank significantly amended HOEPA to expand the typesof loans that are subject to the coverage of HOEPA, to revise the triggers for HOEPA coverage,and to strengthen and expand the restrictions that HOEPA imposes on HOEPA mortgages.

� Scope of HOEPA coverageMost types of mortgage loans, such as purchase money mortgage loans, refinances, closed-end home equity loans and open-end loans, secured by the consumer’s principal dwelling,would be potentially subject to HOEPA.

� Revised HOEPA thresholdsHOEPA would be triggered if:

� A loan’s annual percentage rate (APR) exceeds the average prime offer rate (APOR) by6.5 percent for most first-lien mortgages and 8.5 percent for subordinate lien mort-gages;

� A loan’s points and fees exceed five percent of the total transaction amount or a high-er threshold if the loan amount is below $20,000; or

� The creditor charges a prepayment penalty more than 36 months after loan con-summation or account opening (for HELOCs) or penalties exceeding more than twopercent of the amount prepaid.

� Restrictions on loan termsDodd-Frank restrictions and requirements concerning loan terms and origination practices for

mortgage loans subject to HOEPA include:� Prohibiting balloon loans, prepayment penalties and the financing of points and fees.� Restricting late fees to four percent of the past due payment, restricting fees on pay-

off statements and prohibiting fees to modify/defer a loan.� Creditors originating HELOCs would be required to assess a consumer’s ability to repay.� Creditors and mortgage brokers would be prohibited from recommending to, or

encouraging, a consumer to default on a loan in order to refinance into a high-costmortgage.

� Requiring creditors to obtain confirmation that the consumer received counseling onobtaining a HOEPA loan.

Homeownership counselingThe proposed rule would implement two Dodd-Frank provisions governing homeownershipcounseling that are unrelated to the HOEPA amendments.

� Regulation XLenders would be required to provide a list of federally-certified or approved homeownershipcounselors/organizations to consumers within three business days of their applying for anymortgage loan. This proposed rule would implement an amendment to RESPA made bySection 1450 of Dodd-Frank.

� Regulation ZCreditors would be required to obtain confirmation that a first-time homebuyer has receivedhomeownership counseling before making a negative amortization loan. This proposed rulewould implement an amendment to TILA made by Sections 1433(e) and 1414 of Dodd-Frank.

Comments regarding this proposed rule must be submitted on or before Sept. 7, 2012.

Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received herJD from the Georgetown University Law Center, and is licensed in California and Texas. She maybe reached by phone at (800) 649-1362 or e-mail [email protected].

CFPB Proposes Rule on High-Cost Mortgages and

Homeownership Counseling

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Iwant to begin thismonth’s President’sCorner with an

update from our meet-ing with the DeputyDirector of the Con-sumer Financial Protec-tion Bureau (CFPB), RajDate . John H .P .

Hudson, NAMB Government AffairsChair; Roy DeLoach, NAMB Lobbyist; andI went to Washington, D.C. to meet withMr. Date at his request. This stemmedfrom a letter I wrote to him concerninghis remarks about mortgage brokers. Itwas ironic that our meeting took placeon the day that the CFPB released their1,100-page document on the new GoodFaith Estimate (GFE) and Truth-in-Lending Act (TILA) rules.

Our meeting with Mr. Date at theCFPB went very well. The impressionthat I got was that the CFPB seemsrushed to make dates that have beenset up for them by the Dodd-Frank Act.The people there are very smart, how-ever, they do not have any practicalmortgage experience and this hurtswhen they are trying to make decisionsbased on what goes on in the mortgagebusiness. We continue to work withthem and address many questions thatthey have. Stay tuned for more infor-mation coming from our GovernmentAffairs Committee about these items.

In many of the past articles I havewritten, I have stated that many timeson Capitol Hill, we are asked how manymembers we have. Our membershipnumbers always seem to hover aroundthe 5,100 mark, fluctuating up anddown each month. What I do notunderstand is why people are not join-ing, especially when all of this stuff ishappening in D.C. and it affects all orig-inators. NAMB—The Association ofMortgage Professionals is the only non-profit organization that represents you,the mortgage originator, inWashington, D.C. We are constantlylooking out for your best interests, andwe do this as a volunteer organization.No one on the board of directors, thechairperson of any committee or anycommittee members receives compen-sation for their time, their energy andtheir efforts. So I ask the question …why haven’t you joined yet? It cannotbe the cost because as a PlatinumMember, the cost is only $120 per year.And many of you spend that much in aweekend going out on the town or todinner. Just $10 per month gets youinformation, gets you involved, andgives you a voice in Washington, D.C.Just $10 per month makes you part ofan organization that believes in ethicaland professional behavior and makes

you part of the team. It also makes youeligible to attain the NAMB LendingIntegrity Seal of Approval that can bedisplayed for all of your current andpotential customers to see. This Sealhelps homebuyers find hard-workingand ethical mortgage professionals. Toearn the Lending Integrity Seal ofApproval, professionals must undergo arigorous process—complete continuingeducation, pass a criminal backgroundcheck and pledge to adhere to a strictcode of ethics, best business practices,and an ethics grievance review process.

In addition, you get one of the bestGovernment Affairs teams that works toprotect you, the mortgage originator.We fight for you and your business.Countless hours are put in by our teamthat reviews reports, rules and anythingthat comes out of the House, the Senateand the CFPB to name just a few of thecountless items that are dealt with byour Government Affairs team. John H.P.Hudson, Government Affairs Chair; andRick Bettencourt, Vice Chair, are twodedicated individuals who give count-less hours to make sure that you, themortgage professional, are informedand up-to-date with everything from allof the agencies.

And while we are on the subject ofcommittees, Kay Cleland and her groupof regional vice chairs of the NAMBMembership Committee are workinghard to put together different programsthat will benefit all NAMB members.They are also calling new members towelcome them to the NAMB family andthe results have been very well-received. And if you have any questionsabout your membership, please checkthe NAMB Web site at NAMB.org foryour vice chair and reach out to them.They are capable of answering almostall of your questions on your benefitsand membership with NAMB.

As many of you are probably notaware, NAMB has developed a for-prof-it side called “NAMB PLUS.” NAMB PLUSis the side of NAMB that handles ourStrategic Alliances that benefit all NAMBmembers in the form of programs, ben-efits, insurance, bonds, etc. that makeyour day-to-day operations and such abetter experience. These benefits saveyou, the NAMB member, money on allkinds of things, from insurance to officesupplies. There is a separate board ofdirectors that oversees all of theseaspects of this side of the business.Currently, there are three members(vice president, past president and adirector) of the current NAMB board ofdirector, including Donald Fader, NAMBPLUS president, along with JohnCouncilman and Jim Pair. The otherfour positions of the NAMB PLUS board

are comprised of members from themembership ranks of NAMB, includingNathan Pierce of Utah, Kelley Hamiltonof Colorado, George Burkley of Indiana,and one other member that will benamed shortly. These people comprisethis board and work independently of theNAMB board. These positions are a year-ly position and will be elected each year.

You can also see changes in the newNAMB NATIONAL Conference inDecember. We have contracted with acompany called Agility Resources Groupof West Hartford, Conn. Vincent Valvowill oversee the event planning of thisyear’s conference. We are currentlysecuring some great speakers and greattalent to share information, and helpmake each of you better originators andmore productive. We are also workingon having someone speak about devel-oping a Facebook Page or Web site onthe spot, and you will walk home withthis completely done. The dates for thisyear’s inaugural NAMB NATIONALSaturday-Monday, Dec. 8-10 at the MGMGrand in Las Vegas. Start planning yourtrip today and be on the lookout forthose cheap fares.

I have been in this position for near-ly nine months, and I am hoping thatmany of the changes that we havemade to committees, the board, the by-laws, etc., have been for the better.NAMB seems to be running smootherand at a better pace, and it seems thatyou, the member, are happy with thesechanges.

We are about to make another bigchange and that is the NAMB Web site.As you all are aware, your User Name

changed to your e-mail address a fewweeks ago in preparation of this transi-tion. By the time you read this, weshould have all of the changes madeand you should be seeing these changesin your everyday life. A lot of time hasbeen put into this by Joel M. Bermanand Beverly Koondel of NationalMortgage Professional Magazine. Theyare working with our provider to makesure that when we go live, everything iscompleted. So be looking for this tohappen shortly after the first of August,and I hope that you are pleased withthe changes.

On a final note, I am making onemore push for all of you to join NAMB.This is my goal to get each of you whoread this magazine to become mem-bers. Membership is something that Ido not take lightly and as your presi-dent, I appreciate everything that youas a member do for this organization.So why not ask your fellow originators,appraisers, title people, processors andowners to step up and become mem-bers. It is time that we all become partof the solution and stand together andmake a statement. We can accomplishmore things together than as individu-als. Now is the time to join me and let’sshow everyone that mortgage profes-sionals will not be taken lightly. We area group of professionals that are stand-ing together. Now and in the future!

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

The President’s Corner: August 2012

By John H. P. Hudson

Title XIV of theDodd-Frank Actstates that a

creditor may notmake a mortgageloan without firstdetermining that the

borrower has a reasonable ability-to-repay the loan, meaning mortgagecompanies may only originate a “quali-fied mortgage” (QM). This sounds rea-sonable enough … let’s make sure thatconsumers can afford their mortgage(the economy and housing marketwould not be in the shape it is had exot-ic loan programs such as stated income,

no-doc, pay option ARMs, and sub-prime not been offered to every con-sumer with a pulse). However, there aresome facts about measuring ability-to-repay and QMs, Dodd-Frank, and theConsumer Financial Protection Bureau(CFPB) that every real estate agent,mortgage professional, builder, titlecompany and consumer needs to beaware of because the landscape ofmortgage finance is about to bechanged again.

First of all, everyone needs to knowexactly what a QM really is. The defini-tion being put forth starts out fairlysimple before things get complicated.In order to measure an ability-to-repay,a mortgage lender must consider and

Homeownership is Under AttackWhat is a “qualified mortgage,” how it will limit access to credit for consumers, and what can you do about it?

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verify eight points: Income, employment,qualify based on fully-indexed rates, pay-ments on simultaneous loans, mortgageobligations, current debt, residualincome and credit history. Again, this ispretty easy to do considering the loansoriginated today are arguably the safestand best performing loans ever to bemade because no lender wants to be in aposition to have any more foreclosures or“buy backs.” The parts of Dodd-Frank’s“ability-to-repay” that most are not awareof involved the “three percent cap” ontotal points and fees and the “safe harborvs. rebuttable presumption” theorieswhich will determine litigation risk formortgage originators.

In my honest opinion, the “three per-cent cap” on total points and fees will cre-ate the most havoc to our economy. Ascurrently drafted in Dodd-Frank, the“three percent cap” will include: Affiliatedtitle fees, loan originator (LO) compensa-tion (which is double dipping), and lastbut certainly not least, amounts of insur-ance and taxes held in escrow. You readthat correctly, escrows can be included inthe three percent cap on points and fees… oh, and by the way, QMs apply to ALLtypes of home loans such a conventional,FHA, VA, etc. While there is no empiricalevidence to suggest that mortgages withpoints and fees over three percent have ahigher rate of default if they were toinclude these three items, the CFPB undertheir statutory authority from Dodd-Frank are moving forward with this rulewhich will be finalized in November 2012(it was recently postponed until after thepresidential election). Now, imagine whatwill happen to mortgage finance if everypossible expense under the sun is includ-ed (Texas A6 home equity loans alreadyhave a three percent cap on points andfees, not including these items and con-sumers are hard pressed to find anylender willing to make these loans for lessthan $150,000). Include the compensa-tion I pay my loan officer, the title fees fora company affiliated with a real estatecompany or builder, and the high prop-erty taxes and insurance for any home inTexas, and consumers may find them-selves hard pressed to find any lenderwilling to lend for under $250,000.

The other alternative to establishinghigh minimum loan amounts creates itsown potential set of issues. In order tooffset the costs for these items, lenderswill be forced to finance these costs intothe interest rates for consumers.Basically, the lower the loan amount, thehigher the interest rate, which the marketalready sees some if this today in theform of loan level price adjustments forFNMA/FHLMC loans. In an environmentwhere rates are hovering around fourpercent, offering 4.5 percent to a con-sumer may not sound so bad. However,this comes with its own set of conse-quences. Higher interest rates not onlywill mean less qualified buyers, but the

potential for litigation to lendersbecause the legal term disparate impactcould then be applied consideringracial and economic demographicswhen applied to loan amounts and loanterms offered.

The “safe harbor” vs. “rebuttable pre-sumption” definitions for originating QMsis currently locked in a heated debatebetween industry and consumer groups.The mortgage industry, including theNational Association of Realtors (NAR), arepushing for a “safe harbor,” meaning if amortgage company originates a QM loan,the originator will be protected from cer-tain liabilities and legal challenges.Consumer groups are pushing for the“rebuttable presumption” because if alender follows the rules and originates aQM loan, the consumer can still litigateyears down the road and use this as adefense of foreclosure. An example wouldbe if a borrower were to lose their job 15years into a 30-year mortgage, they couldchallenge a foreclosure proceeding bymaking the originating creditor prove incourt they properly measured the con-sumer’s ability-to-repay. Under this alter-native, lenders will be forced to only lendwell within the realm of qualified mort-gages, meaning tighter underwriting andfewer homebuyers. Keep in mind, severefinancial liabilities exist for ANY lenderfailing to the meet the “ability-to-repay”definitions of the Dodd-Frank Act.

So, what can you do about it? First andforemost, educate yourself, your col-leagues and consumers on these issues. Istill get too many “deer in the headlight”looks when I speak for various groupsthroughout the country because manyhousing professionals are “too busy” topay attention to the looming regulationsapproaching. Second, you need to getinvolved and support your trade associa-tions. If you are a mortgage professional,you need to be involved and supportNAMB—The Association of MortgageProfessionals (NAMB serves both mort-gage brokers and mortgage bankers). Lastand certainly not least, every personemployed in the real estate or housingfinance industry needs to call their leg-islative representatives to comment on“ability-to-repay.” It doesn’t matter if youare the secretary or the chief executiveofficer, it takes just five minutes to pick upthe phone and call your congressman.

Consumers deserve protection frombad actors. Not one person I know dis-agrees with that. However, the unintend-ed consequences from poorly crafted leg-islation are going to wind up harming thevery people it is meant to protect.Homeownership is still the AmericanDream, and every consumer deserves theopportunity to participate in that dreamwithout the fear of being forced into apermanent class of renters. I refuse toresign myself to mediocrity and so shouldyou. So get involved today and let’s worktogether to stop this threat to the

American Dream.Please contact me with any ques-

tions, comments or concerns at [email protected]

John H.P. Hudson became a residentialloan officer in 1998 and has spent thepast eight years serving mortgage brokersand loan officers as area manager in SanAntonio and southern Texas with

Premier Nationwide Lending. Hudsonalso is the 2012 Government AffairsChair for NAMB—The Association ofMortgage Professionals having volun-teered many years president and otheroffices of the San Antonio TexasAssociation of Mortgage Professionals, achapter of the NAMB. He may bereached by phone at (817) 247-4766 ore-mail [email protected].

The First Annual NAMBBenefit Golf Tournament

Wednesday, October 17Coyote Ridge Golf Club

1640 W Hebron Parkway • Dallas1:00 p.m. Tee Time

Entry Fee of $100 per player/$400 per team

Great prizes and giveaways including golf clubs, gift cardsand the chance to win a BMW in the hole-in-one challenge.All proceeds to benefit NAMB—The Association of MortgageProfessionals.

For more information, visit www.originatorfest.com.

NAMB Government Affairs Round Up:

� NAMB testified before Congress on July 11 at a hearing titled, “TheImpact of Dodd-Frank’s Home Mortgage Reforms: Consumer andMarket Perspectives.” Please visit the House Financial ServicesCommittee to view our testimony or contact the NAMB GovernmentAffairs team for more info by e-mail at [email protected].

� In the wake of a U.S. Department of Justice lawsuit settlement over“Disparate Impact, Wells Fargo Exits Wholesale,” NAMB’s GovernmentAffairs team has been monitoring this issue and even met with the DOJon the subject of disparate impact. NAMB will be hosting a Webinar inAugust to help inform members how to protect themselves from poten-tial problems regarding disparate impact.

� NAMB met with the Consumer Financial Protection Bureau (CFPB) twice inJuly. In the beginning of the month, Government Affairs Committee ChairJohn H.P. Hudson and President Don Frommeyer met with Raj Date,Deputy Director of the CFPB. More recently, NAMB conferenced with theCFPB regarding the developments on the Qualified Mortgage (QM).

� NAMB has been active on the issue of attorney-client privilege for non-depository mortgage companies during CFPB examinations

If you have concerns or issues and would like NAMB to help, please [email protected].

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By Ken Pederson

Early on, somethingtold me I needed tomove my business tothe Internet. It wasthe mid-1990s, beforethe Web really took

off, when many of my colleagues and Ibegan using e-mail. Almost instantly, Isaw this simple communication deviceas a means to connect with other pro-fessionals and get the word about mybusiness. I started a Friday morning e-mail distribution to a group of realestate agents, writing about things thatwere happening in real estate and inthe mortgage industry—things Ithought others would want to knowand to keep my name out there. For thepast 15 years, I have continued to sendthat e-mail.

Over the years, as new opportuni-ties appeared, this effort began tosnowball. In 2004 or 2005, a buddy ofmine who received my Friday newslet-ter suggested I should start blogging.So in 2005, I started a blog. I wouldwrite articles for my blog, but also setthings up so that every Friday morn-ing, my blog article would be sent tothe same people who subscribed to myFriday e-mail. Then Facebook rolledaround, and I began leveraging myblog into Facebook posts. Eventually, Istarted doing video and started tyingin YouTube to my blog and Facebookpage. When Twitter came along, bingo,I had another tool to use! So now myFriday e-mail has morphed into onemessage spread across multiple plat-forms.

I’m no Ashton Kutcher in terms ofonline popularity, but I do pretty well. Ihave 136 followers on Twitter, morethan 300 fans on my Facebook FanPage, 1,000 friends on my personalFacebook page, and more than 500connections on LinkedIn. These con-nections have enabled me to educateborrowers on their mortgage optionsand help our real estate agent partnersgrow their businesses. I should mentionI’ve also gotten quite a few successfulleads along the way. But I’ve alsolearned a few things, too.

Consistent communication is keyWhile one might think that social mediahas made my life more difficult—I haveall these platforms to manage—thereality is that it’s made things a lot eas-ier. I don’t write as many blog posts as Iused to, because now we’re usingFacebook and video posts, too, andboth are less time-consuming. Whathasn’t changed is the Friday distribu-tion. I’m probably overly religiousabout doing something every Friday,because my audience expects it. Thereare perhaps one or two weeks out of theyear when I don’t do something thatFriday. Otherwise, I’m very consistentwith it, even if it is short.

By staying consistent, I’ve been ableto leverage social media to build my rep-utation as someone who communicateswell and communicates often, which isextremely important in the mortgagebusiness. Real estate professionals andborrowers are both inundated withinformation on a daily basis. There is somuch happening so quickly, fromchanges in rates to new rules and regu-lations to new loan programs, that it’simpossible for any one person to keepup with it all on their own. My companyin particular, Fairway IndependentMortgage, is extremely progressive whenit comes to learning and sharing what ishappening with the market, with ourpartners and in government. So everytime I’m learning something, I’m sharingit so others can benefit, too.

Identify your audienceAnother thing social media has done forme is increase my exposure. Peopleknow me when they see me, even ifwe’ve never met. I certainly receivebusiness from my social media efforts,but another benefit is that it makescommunication easier when a newclient has already read my post aboutjumbo mortgages or some other topiche or she is interested in. Likewise,there are real estate agents I’ve nevermet who have read a post of mine andreached out to me on LinkedIn orFacebook. But no matter what socialmedia platform I’m using, I try not tofocus too much on the mortgage busi-

ness. That might sound funny, but thefact is most people are not thinkingabout mortgages all day long. Over theyears of using social media, I’ve gainedan understanding about what peopleare really interested in.

Real estate agents, for example, areparticularly interested in sales andmarketing techniques, or what I call“head medicine.” And pretty mucheveryone is interested in money,health, their homes and wealth build-ing. I tend to think my clients aresomewhat like me and care aboutthose things, so I find thought-provok-ing information to read and sharethese things with them. Social mediais a great tool in that sense. It is, ulti-mately, about sharing, and you reallylearn what people care about basedon how many people are reading eachblog, watching each video, or “Liking”a particular Facebook post.

Aim your messageI’m platform-conscious with socialmedia, and tailor my messages depend-ing on what service I’m using. I mayhave one blog article, for example, butwill retool it slightly depending on whatplatform I’m sharing it on. For example,LinkedIn has become a powerful toolfor companies and business profession-als to connect, so my office will use it toshare a lot of business-type posts. I alsoparticipate is group discussions onLinkedIn, but again, I don’t sit thereand talk about mortgages all day. I willtalk about what is pertinent to thatgroup.

On Facebook, however, it’s evenmore social. You can’t beat people overthe head by marketing your productsand services every hour. We post to ourbusiness Fan Page on Facebook and mypersonal page only with appropriatemessages. People use Facebook duringtheir spare time, and when they do,they don’t want to be bombarded withsales pitches or even subjects that aretoo serious. Facebook is a great place tohave fun, though. For example, I rou-tinely give away gift certificates by hold-ing a contest and asking people to“Like” my Facebook Page or write acomment.

It’s not too lateI know there are a lot of mortgage pro-fessionals who think they don’t havethe time or can’t write, and don’t evenhave the time for it anyway. The truthis, you don’t need to be a Pulitzer Prize-winning author—almost anyone cancrank out an interesting Facebook post,and that only takes five to 10 minutes aday. You can take that same post andput it on LinkedIn. Then you can createa free blog using Google’s Blogger plat-form and put the same post there, andmaybe expand on it. Using socialmedia, there are all kinds of ways toleverage the same or similar content.

And by the way, I don’t handle allsocial media by myself. I conceive andcreate most of the content, but we havea marketing assistant in our office whohandles the distribution side of things.She’s able to take my blog and videoposts and rework them for LinkedInand Facebook. There are also servicesout there that will allow you to take asingle article and post it simultaneouslyto multiple platforms. In our case, how-ever, I prefer to push the content wecreate directly onto individual plat-forms. It’s my opinion that we get bet-ter, more focused exposure, plus wehave the opportunity to customize themessage based on the particular audi-ence that will see it.

Even if you are really busy—and for-tunately, many of us are doing greatbusiness this summer—you should beputting some time into your marketingyour business every day. The best partabout social media is that all thesetools are free, and each of us alreadyhave friends and spheres of influencethat we already market to. You’re justtrying to create a little tribe, and thenkeep them informed and entertained. IfI can do it, anybody can!

Ken Pederson is a branch manager andCertified Mortgage Planner Specialist(CMPS) at Fairway IndependentMortgage Corporation in Lancaster, Pa.Ken has 25 years of experience as a mort-gage originator, branch manager andeducator. He can be reached by phone at(717) 431-9299 or e-mail [email protected].

What ILearnedThroughSocial Media

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What may be reportedIt is also important to recognize that fed-eral laws reward whistleblowers for report-ing not merely cases of outright fraud, butalso cases of recklessness. Under the FalseClaims Act, true to its name, the questionis whether a false statement was made insupport of a claim for federal money, andif so, whether the person making the state-ment knew the statement was false orrecklessly disregarded, or deliberatelyignored, the fact that it might be false. Inthe FHA insurance context, False ClaimsAct cases have often focused on DirectEndorsement certifications, which statethat a loan is qualified for FHA mortgageinsurance, when it is not. Under the FalseClaims Act, there is no need for the gov-ernment to prove that a lender lied abouta certification to defraud the FHA. Instead,the law allows the government to proceedif the lender either knew the loan did notqualify or failed to do the due diligencerequired to figure out if the loan qualified,and then certified the loan in any event.

The FHA’s Direct Endorsement lendingprogram has generated the most FalseClaims Act cases in this field. Those caseshave primarily focused on three areas, eachof which could form the basis of a whistle-blower action. First, as described above, thegovernment has examined whether DirectEndorsement certifications were false onlarge sets of loans. Second, as reflected inHunt’s complaint against CitiMortgage, thegovernment has scrutinized QC programs,including whether or not lenders have actu-ally reviewed all early payment defaults.Third, the government has looked at otherDirect Endorsement lender rules, such aswhether Direct Endorsement underwriterswere actually making underwriting deci-sions themselves and whether lenders hadproperly disclosed branch locations.

These are just some of the types of casesthe government could bring in this field. Forinstance, if the government can establishfraudulent intent, the Justice Departmenthas the power to bring actions relating toconventional mortgages, too. In addition,the Securities & Exchange Commission (SEC)has a whistleblower program whichrewards whistleblowers for stepping for-ward with information about securities vio-lations, such as misrepresentations in thesale of mortgage-backed securities (MBS).With so many federal programs solicitinginformation from whistleblowers, lendersand employees should not assume, withoutconsulting qualified legal counsel, that anyparticular misconduct lies beyond the reachor interest of the federal government.

Financial rewardsThe federal government’s most successfulwhistleblower programs provide handsomerewards for those who come forward withinformation, in order to encourage whistle-blowers to step forward. Under the FalseClaims Act, whistleblowers are generallyentitled to rewards between 15-25 percentof the government’s recovery against adefendant. For Hunt, that translated into

more than $31 million. The SEC’s whistle-blower program offers rewards in the rangeof 10-30 percent, in cases involving sanctionsof more than $1 million. In the trillion-dollarmortgage industry, the financial rewards forwhistleblowers can be staggering.

The processThe particular process for initiating a whistle-blower complaint depends on the circum-stances, but the first step is always the same:Consult a qualified attorney for advice.Lawyers who practice in this area generallytake whistleblower claims on contingency,

meaning that the lawyer will not charge forlegal advice, unless and until a whistleblow-er succeeds in collecting a reward.Depending on how someone presents infor-mation to the government, that person ulti-mately might be considered a mere witness,rather than a whistleblower. Whistleblowersare entitled to rewards; witnesses are not. Anexperienced lawyer should be able to protectthese and other interests of a would-bewhistleblower, explain the process, and workcooperatively with the government in mov-ing a case along.

It is unlikely that Hunt’s story will beunique. Mortgage lenders and mortgageprofessionals need to recognize the poten-tial for whistleblowing in the mortgageindustry, so that lenders take their obliga-

tions and employee complaints seriously,and so that mortgage professionals under-stand the rewards available to them forreporting misconduct. Whistleblowingremains a new phenomenon in the mort-gage industry. Yet, with ever-increasingfederal scrutiny of the industry, the signifi-cance of whistleblowers is likely to contin-ue to grow in the years ahead.

Brian M. Feldman Esq., is an attorney withHarter Secrest & Emery LLP, whose workincludes the representation of clients in FalseClaims Act cases. He previously worked withthe Justice Department at the United StatesAttorney’s Office for the Southern District ofNew York in Manhattan. He may bereached by phone at (585) 231-1201 or e-mail [email protected].

mortgage industry whistleblowers continued from page 8

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AUGUST 2012

Wells Fargo to CeaseFunding MortgagesOriginated byIndependent Brokers

Wells Fargo announcedthat on July 13, it willdiscontinue fundingmortgages that are

originated, priced and sold by inde-pendent mortgage brokers through itswholesale channel. Mortgages sold byindependent brokers through the whole-sale channel currently represent five per-cent of the company’s home mortgagefunded volume.

According to Wells Fargo, mortgage bro-kers operate as independent businessesand are not employed by Wells Fargo.Therefore, Wells Fargo cannot set loanprices for independent mortgage brokersnor control the combined effect of thenegotiations that thousands of these inde-pendent mortgage brokers conduct withtheir customers.

“Wells Fargo takes pride in serving thehomeownership needs of all of our cus-tomers, and we are fully committed to fairand responsible lending,” said Mike Heid,president of Wells Fargo Home Mortgage.“Through our separate decision to nolonger fund mortgages through independ-ent mortgage brokers, we can control howthat commitment is met on every mort-gage that Wells Fargo makes.”

After Friday, July 13, Wells Fargo will nolonger accept new applications for loansoriginated by independent mortgage bro-kers through its wholesale channel, butwill work to ensure existing applicationsare processed and closed.

Economists andHomeowners Agree:Strategic Defaults ArePoor Option forUnderwater Homeowners

If faced with adeeply underwa-ter mortgage,most economistsand homeowners

agree they would not strategicallydefault, according to dual surveys fromZillow Inc. Nearly three-quarters ofeconomists surveyed in the June 2012Zillow Home Price Expectations Survey(71 percent) said they would not strate-gically default, even if they owed ontheir mortgage at least 40 percent morethan the current value of their home.

The survey, sponsored by Zillow Inc.and conducted by Pulsenomics LLC, wascompiled from 114 responses from a

diverse group of economists, real estateexperts and investment and marketstrategists. The main portion of the sur-vey, which captures respondents‘expectations concerning the future ofhome prices, was released last month.

In a separate Zillow survey conduct-ed by Ipsos, 59 percent of homeownerssaid they would not make the decisionto strategically default if they wereunderwater on their home by morethan 40 percent. Nearly 75 percent ofhomeowners in the U.S. with an under-water mortgage are underwater by 40percent or more, according to Zillow’sfirst quarter Negative Equity Report.

“We were initially surprised that so feweconomists would be willing to strategical-ly default, since when you do the math, itcan often be the best economic choice, ifyou leave aside moral and ethical consid-erations,” said Zillow Chief Economist StanHumphries. “Of course, strategic default isnot just a mathematical decision. The mostcommon reason for avoiding strategicdefault cited by homeowners was that it isa moral issue. That likely comes into playwith economists and analysts, as well.”

Thirty-seven percent of homeownerswho said they would not strategicallydefault cited moral reasons, while 35 per-cent indicated it didn’t make sense giventhat they intended to live in their currenthome for a long time.

The Zillow Home Price ExpectationSurvey additionally asked the same groupof economists and housing analysts theirstance on the adoption of government-sponsored mortgage principal forgivenessinitiatives for underwater borrowers. Thesurvey found that 72 percent of respon-dents opposed any adoption of such pro-grams, while 28 percent were in favor.

“These survey results suggest that eco-nomic and financial considerations are notthe dominant drivers of behavior for evendeeply underwater borrowers,” saidPulsenomics Founder Terry Loebs. “Thisunderscores the challenges in valuingunderwater mortgages and in determiningthe costs and benefits of principal forgive-ness initiatives.”

LexisNexis Fraud ReportShows Rise in CollusionActivity in the MortgageIndustry

LexisNexis Risk Solu-tions has issued its14th Annual Mort-gage Fraud Report

By Tom Delaney

The United Statesappears to be emerg-ing from a severerecession that wascaused, in part, by adramatic collapse of

the U.S. housing market. While thereare signs of improvement in the over-all economy, and the housing marketspecifically, there are still manyobstacles to a full-fledged economicrecovery. Among these obstacles isthe sustained high level of U.S. mort-gage loan delinquencies that contin-ues to adversely impact lending insti-tutions across the country. An impor-tant risk mitigation tool that lendinginstitutions should consider in thistime of uncertainty is MortgageImpairment/Mortgagee’s Errors &Omissions insurance (MIP).

Financial institutions that benefitfrom MIP insurance include: Commercialbanks, community banks, creditunions, mortgage banks, insurancecompanies, and any other financialinstitution that originates, services, orinvests in mortgage loans.

Essential components of coverageMIP providestwo basic com-ponents of in-surance cover-age within onepo l i cy fo rm:Mortgage Impair-ment and Mort-gagee’s Errors &Omissions.

1. Mortgage ImpairmentMortgage Impairment provides insur-ance coverage to a financial institutionfor a loss to its “Mortgage Interest”

(defined as interest in real property assecurity for a loan). The core element ofMortgage Impairment provides cover-age to a financial institution for loss toits Mortgage Interest caused by the lack,inadequacy, or uncollectibility of directinsurance against physical loss or dam-age to the collateral property caused by“Required Perils” (i.e., the perils of fire,extended coverage, flood in the amountnecessary to comply with the federalFlood Disaster Protection Act of 1973(Flood Act), or other similar direct phys-ical damage perils against which thelender requires the borrower to obtaininsurance on the collateral property).These Required Perils are typically cov-ered by homeowner’s insurance, fireand extended coverage insurance, andflood insurance policies. MortgageInterest can even be expanded to coverforeclosed properties after a financialinstitution takes ownership.

As a supplement to the MortgageImpairment component of the policy,MIP insurance may also provide cover-age to a financial institution for loss toits Mortgage Interest caused by the lack,inadequacy, or uncollectibility of direct

insurance against physicalloss or damage to the

collateral propertycaused by a “Non-

Required Perils”(i.e., perils againstwhich the lenderhas not requiredthe borrower toobtain insuranceon the collateral

property). Examplesof Non-Required

Perils include:

� Earthquake where theborrower was not required to pur-

chase earthquake insurance.

A Lending Institution’sImportant Ally in aChallenging Market

“An important risk mitigation tool that

lending institutions shouldconsider in this time of

uncertainty is MortgageImpairment/Mortgagee’s

Errors & Omissions insurance (MIP).”


An important risk management tool

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When did we forgetthat mortgagebrokers are the faceof each home loan?

www.FGMCwholesale.com (800) 296-2275

In our crazy world of mortgage securitization and lender portfolios, it’s

sometimes easy to forget that most homebuyers buy homes from people, not

logos. For decades, the mortgage broker has been the trusted advisor to

millions seeking the American Dream. FGMC hasn’t forgotten that, and

we’re providing our brokers the widest range of loan products and the most

efficient lending processes possible to ensure your clients are getting into

new homes ... and that you’ll be the one handing them the keys.

knowledge makes him unique in ourindustry, and gives him an advantage,especially when it comes to workingwithin the multiple regulatory require-ments we face.

This article is not intended to suggestthat all promotions must be internal.Indeed, there can be some disadvan-tages. Sometimes, our top employeesbest serve the company in the positionsthey currently have. We’re all familiarwith the proverbial star salespersonwho struggles in the role of sales man-ager. Similarly, when we only promotefrom within, we risk building a climateof entitlement. Ours is not an industrythat can afford executives who attainedtheir positions simply because they’ve“put in their time.”

Nonetheless, it seems there’s notenough internal promotion in themortgage industry. We’ve been accusedmore than once of taking a very short-term perspective when it comes tostrategy and development. A failure todevelop our young talent only supportsthat accusation. Change is coming to uswhether we want it or not. While we’rerevisiting our production and compli-ance strategies, wouldn’t it be anopportune time to revisit our approachto recruitment and retention as well?

Andrew Peters is chief executive officer ofMcLean, Va.-based First GuarantyMortgage Corporation. Peters has beenwith FGMC for over 10 years, and hasbeen the CEO since September 2011.Before that, he served FGMC as its seniorvice president, national business direc-tor. He may be reached by phone at (301)682-8228 or e-mail [email protected].

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By Andrew Peters

The mortgageindustry, on thewhole, tends to

take a “promote fromwithout” approachwhen it comes to fill-ing key positions,

especially at the executive and manage-ment level. We’ve seen this recentlywith the demise of several major busi-nesses, opening the flood gates for thesurviving companies to recruit new tal-ent. Is it possible, however, that wedon’t do enough, as an industry, toidentify and develop star performersfrom within our own ranks?

While data specific to the mortgagelending industry is difficult to find, it’snot hard to discover the benefits ofretaining and promoting our best youngprofessionals from within. A SashaCorporation study (http://www.sasha-corp.com/turnframe.html) points out thebiggest benefit: Cost reduction.According to this study, which also con-sidered the surveys of several other con-sultants, keeping a “frontline employee”for 20 years can save the employer asmany as 10 or even 20 “turns,” which canamount to a cost savings of $100,000 ormore. The same study suggests that theaverage cost of losing and replacing(retraining) an $8/hour employee tendsto run over $5,000. And this is justretention of one front line employee.What are the costs of replacing a man-ager or executive?

Another huge benefit to promotingfrom within is familiarity. While theremay be some learning curve with the new

position, it will not be compounded bythe very real learning curve of a compa-ny’s culture and “realpolitik.” The newmanager or executive will very likely knowhis or her way around, which only accel-erates the time frame which he/she willneed to get up to speed.

Morale and loyalty are not“hard costs,” and it’s difficultto monetize the concepts.But make no mistake …they are real, and theycan boost one’s busi-ness performance.Juan Rodas is AVP ofsecondary market-ing and post pro-duction with FirstGuaranty MortgageCorporation. Hestarted with thefirm years ago onthe ground floor inthe post-closingdepartment. He hasworked his waythrough the ranks, andwas promoted to his cur-rent position based upon hisbusiness plan, his hard workand knowledge of Ginnie Mae securi-tizations. Rodas points out that otherswithin the ranks take note when some-one is promoted from within.

“It increases the morale to know thatI can one day move forward and takethe next step here,” Rodas said. “It helpspeople to know that there can be areward for the hard work.”

Rodas further points out that inter-nal development can build a stronger,more efficient team. In his case, the fact

that he has worked in several positions(which he know manages) affords him aknowledge (and empathy) for very prac-tical situations.

“In secondary, to me, it’s not justabout price. I’ve been in my team-mates’ shoes, and know what they do,”

said Rodas. “I don’t have to goto my back office to answer

every question. I alreadyknow the Ginnie Mae

requirements.”John Boyce came to

First Guaranty fiveyears ago as an inputspecialist. He hasbeen promoted sev-eral times, and isnow AVP, wholesaleproduction manag-er. He has been inthe industry forapproximately 14

years, and notes thatpromotion from within

tends to be the excep-tion, rather than the rule,

in our industry. He agreeswith Juan that cultivating

leadership from within the ranksisn’t just cost-effective. It can boost

morale and effectiveness as well.“Promoting people from within the

company lets others know that there’s areal opportunity for advancement,”Boyce said. “It encourages and rein-forces good work and team effort.”

John has been one of the key peoplein First Guaranty’s wholesale lendingplatform, and uses the knowledge hegained working his way through theranks on a transactional level. That

We Don’t Always Need to Look Elsewhere for Executive Talent

“Ours is not an industrythat can afford

executives who attained their

positions simplybecause they’ve

‘put in their time.’”

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DRI Management Systems (DRI), the termsof which were not disclosed. In conjunc-tion with the acquisition, ServiceLink alsoannounced the launch of ServiceLinkFusion, the company’s new servicingworkflow platform, which was designedand implemented in response to specificfeedback from the company’s servicingclients and incorporates technologygained through the acquisition.

“In response to increasing regulatoryoversight, our clients have asked for a wayto successfully centralize their servicingworkflow management and we listened,”said Laura MacIntyre, ServiceLink’s seniorvice president of servicing solutions.“ServiceLink Fusion is truly a ground-breaking workflow platform, developedand configured in the default space and isready to accept additional configurationsacross the loan servicing continuum.”

ServiceLink Fusion uses the newly-acquired DRI workflow platform to pro-vide loan servicers with the industry’s firstcomprehensive, end-to-end workflowmanagement solution. For the last fouryears, DRI has been focused on develop-ing and configuring an entirely new work-flow and content management platformfor the loan servicing industry. This plat-form, which uses a common database andcommon user interface (UI) framework, isin production and is presently configuredto support eight key functional areas with-in default. While use of ServiceLink Fusionis not limited to default, existing configu-rations include loss mitigation, pre-fore-closure, foreclosure, bankruptcy, claims,third party service ordering, litigation,default administration, and real-estateowned (REO) management. ServiceLink’sFusion platform enables clients to man-age operational risk, while reducing thelimitations and constraints that resultfrom hard-coded point technology solu-tions, databases, and other interfaces. As aresult, compliance with new regulatorymandates, such as providing a SinglePoint of Contact (SPOC) has become rela-tively simple. Integrating withServiceLink’s existing loan origination sys-tem (LOS), Commerce Velocity’s Spectrum,the ServiceLink Fusion team now deliverssolutions spanning the entire loan lifecycle, from origination through servicingand disposition.

“For more than two decades, DRI hasled the way in defining the default tech-nology space,” said Duke Olrich, DRIManagement Systems president and CEO.“We are excited to join forces with such aforward-thinking industry leader and lookforward to working with ServiceLink’sservicing solutions team to deliver newtechnology for the industry.”

Amalgamated BankLaunches New HomeMortgage Division

Amalgamated Bank has announced thelaunch of its own full-service Home

Mortgage Division. The new division willbe providing mortgages for single-fami-ly residences, condominiums, multi-family houses with up to four units, andcooperative apartments. Financing isalso available for vacation and invest-ment properties. Amalgamated is offer-ing a wide range of fixed- andadjustable-rate mortgages (ARMs), aswell as home equity loans and lines ofcredit. Applicants who apply for andhave their mortgages approved duringJuly and August will have the cost oftheir home appraisal refunded byAmalgamated at closing. The Bank isalso offering free workshops for first-time homebuyers to help them under-stand the home financing process.

Amalgamated’s newest division willbe directed by Senior Vice President andDirector of Residential Lending EdwardA. Bolmarcich, who is a veteran mort-gage banker with more than 25 years ofexperience in the field. Prior to joiningAmalgamated, Bolmarcich served forfive years as vice president of residentialand consumer lending for BrooklynFederal Savings Bank, managingBrooklyn Federal’s mortgage origina-tion operations.

“As the progressive force in bankingfor 89 years, we will serve as the lenderof choice for workers seeking to fulfillthe American dream of buying a homefor their family,” said Amalgamated’sPresident and CEO Edward Grebow. Weprovide a trusted and affordable alter-native to the big banks and mortgagecompanies that have so poorly servedhomebuyers by engaging in predatoryand other unfair lending practices.Hardworking people can count onAmalgamated for fair, honest and trans-parent treatment through every step ofthe process.”

Mortgage Professionals to Watch� America’s Choice Home Loans (ACHL)

has named Simon Nwoke as head ofthe new ACHL branch in Macon, Ga.;Dante Miller as head of ACHL’s newCorpus Christi, Texas branch; DavidVelazquez as head of the newVirginia Beach, Va. branch; andRenee Ralls as head of its new Salem,Ore. branch.

� Paul Wyner has been named seniorvice president of third-party origina-tion of Stonegate Mortgage.

� David Robinson has joined GatewayMortgage Group as vice presidentand director of alternative saleschannels.

� MGIC has announced the promotionof Timothy J. Mattke to the positionof senior vice president-controller,chief accounting officer.

� Interthinx has announced the expan-sion of its executive team with theadditions of Jim Portner as head of


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strategic direction and Nick Volpe ashead of product development, prod-uct marketing and program manage-ment teams for loss forecasting andregulatory compliance.

� Sheri Ellen Schwartz has joinedHammerhouse LLC as vice president,senior strategic growth partner.

� Churchill Mortgage has named KraigSpence as a home loan specialist.

� Pacific Residential Mortgage has wel-comed Jari Barton, Alan Dierickx andBrian Patterson as senior mortgagebankers within the firm.

� Ivan Choi of Matt Martin Real EstateManagement (MMREM) has beenelected chair-elect of the Asian RealEstate Association of America(AAREA).

� Earle Thompson has been appointedvice president and manager of WFGNational Title Insurance Company’sLouisiana and Mississippi agencygroups.

� Carrington Mortgage Services LLC hasannounced a few additions to itsMortgage Lending Division, includ-ing: Christopher D’Auria as directorof inside sales, Eric Gertz as regionalsales manager for the Los Angelesarea and Christine Lacey as areasales manager. Carrington has alsoadded six new account executives to

its wholesale team: Bob Accorto,Mike Berlinski, James Finch,Kimberly Gale, Rich Marfino andAnthony Sarvestani.

� Equator has announced the follow-ing additions to its leadership team:Mira Wolff as vice president ofhuman resources and administra-tion; Russell Walker as vice presidentof information security and compli-ance, John Ardy as vice president oftechnology, Jeff Huffman as direc-tor of technology, Stephen Kirkhamas director of IT development, andLance Hamilton as relationshipmanager.

� Andrew Bough has joined Solidifi aschief valuations officer.

� Lisa Hildreth has been named vicepresident of consulting, Sean Snookhas been promoted to vice presidentof conventional claims and AnthonyDiStaulo has been promoted to theposition of vice president of clientrelations and marketing for ClaimsRecovery Financial Services LLC(CRFS).

Your turnNational Mortgage Professional Magazineinvites its readers to submit any infor-mation, events, passages, promotions,personal or professional occurrencesthat seem appropriate and/or otherpertinent data to the attention of:

Heard on theStreet/Mortgage

Professionals to Watchcolumn

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 targetissue.

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NMLS

National Education

National Training

National Networking

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

To Join NAPMW visit:

www.napmw.org

or call: 1-800-827-3034

Have Questions? Please

feel free to e-mail us at:

[email protected]

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

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

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

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

Coast to Coast Associations

Discounted Services

Industry Updates

Education

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Why NAPMW?Three Simple Reasons

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Anti-MoneyLaundering

Program

By Jonathan Foxx

The Financial CrimesEnforcement Network(FinCEN), a bureau ofthe U.S. Departmentof the Treasury,recently finalized reg-

ulations (Final Rule) requiring non-bank Residential Mortgage Lenders andOriginators (RMLOs) to establish anAnti-Money Laundering Program (AMLProgram) and file Suspicious ActivityReports (SARs), as FinCEN requires ofother types of financial institutions.1

FinCEN issued these regulationsdefining non-bank residential mort-gage lenders and originators as loan orfinance companies for the purpose ofrequiring them to establish AMLPrograms and report suspicious activi-ties under the Bank Secrecy Act (BSA).

The effective compliance date forthe Final Rule is Aug. 13, 2012.2

For additional background informa-tion, this article may be read in con-junction with my March 2012 article inthis publication, entitled “Anti-MoneyLaundering Debuts for Non-Banks.”3

FinCEN may impose civil monetarypenalties for non-compliance with itsregulations, including a penalty for eachsuspicious activity reporting violation, socompliance with the SAR regulationsshould be considered mandatory on thepart of responsible management.4

BSA authorizes the Treasury to issueregulations requiring financial institu-tions, including any “loan or financecompany” to keep records and file

reports that are deemed to have “a highdegree of usefulness in criminal, tax, orregulatory investigations or proceed-ings, or in the conduct of intelligence orcounterintelligence activities, includinganalysis, to protect against internation-al terrorism.”

In the supplementary information tothe Final Rule, the term loan or financecompany “can reasonably be construedto extend to any business entity thatmakes loans to or finances purchases onbehalf of consumers and businesses.Some loan and finance companiesextend personal loans and loans securedby real estate, mortgages and deeds oftrust, including home equity loans.”

The following constitutes these cate-gorical definitions recognized by FinCEN:

� Loan or finance company: A personengaged in activities that take placewholly or in substantial part within theUnited States in one or more of thecapacities listed below, whether or noton a regular basis or as an organizedbusiness concern. This includes but isnot limited to maintenance of anyagent, agency, branch or office withinthe United States. The term “loan orfinance company” shall include a soleproprietor acting as a loan or financecompany, and shall not include: Abank, a person registered with andfunctionally regulated or examined bythe Securities & Exchange Commission(SEC) or the U.S. Commodity FuturesTrading Commission (CFTC), any gov-ernment-sponsored enterprise (GSE)regulated by the Federal Housing

Finance Agency (FHFA), any federal orstate agency or authority administeringmortgage or housing assistance, fraudprevention or foreclosure preventionprograms, or an individual employedby a loan or finance company or finan-cial institution. A loan or finance com-pany is not a financial institution asdefined in these regulations.

� Residential mortgage lender: Theperson to whom the debt arisingfrom a residential mortgage loan isinitially payable on the face of theevidence of indebtedness or, if thereis no such evidence of indebtedness,by agreement, or to whom the obli-gation is initially assigned at orimmediately after settlement. Theterm “residential mortgage lender”shall not include an individual whofinances the sale of the individual’sown dwelling or real property.

� Residential mortgage originator: Theperson accepting a residential mort-gage loan application, or offers ornegotiates terms of a residentialmortgage loan.

� Residential mortgage loan: The loanthat is secured by a mortgage, deedof trust or other equivalent consen-sual security interest on:� A residential structure that con-

tains one to four units, including (ifused as a residence) an individualcondominium unit, cooperativeunit, mobile home or trailer; or

� Residential real estate upon which

such a structure is constructed orintended to be constructed.

FinCEN interprets the term “loan orfinance company” under the BSA toinclude any non-bank residential mort-gage lenders and originators (i.e.,“mortgage companies,” mortgagebankers or lenders,” and “mortgagebrokers”) in the residential mortgagebusiness sector.

In this article, I will provide a briefoverview of but a few of the manysalient features that should be expectedin every AML Program. To give you anidea of the size and complexity of awell-constructed AML Program, myfirm’s AML Program is well over 50pages—which consists of a policy state-ment and numerous appendices forapplicable procedures. This should giveyou some idea of the depth and detailneeded for properly implementing AMLcompliance. The absence of or anyinaccuracies in required program com-ponents may indicate a defective policyand procedures—the very tools neededto assist in detecting and preventingmoney laundering or other illegal activ-ities conducted through mortgagebanking conduits.

A word of cautionDo not take the chance of buying anabbreviated or defective AMLProgram, in the hope of merely satis-fying the “basic” FinCEN require-ments. Obtaining a boilerplate docu-ment with your company’s name on itis regressive, and it is a tactic that

Preparation is Protection

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Examiners are now regularly criticizingin adverse findings.

These days, regulators are fullyaware of this ‘short cut’ to compliance.An insufficient AML Program may causeadverse examination findings. Indeed,in some cases, template-driven policyand procedures may cause Examinersto escalate their regulatory review of anRMLO’s anti-money laundering imple-mentation.

AML compliance is a specialized areaof mortgage compliance, necessitatinggenuine, practical, hands-on, regulato-ry compliance and experiential knowl-edge, and an AML Program must reflectprecise policies and procedures thatnot only implement the SAR regulationsbut also conform to a company’s way ofdoing business. Please take note: An AML Program is apolicy statement and set of procedureswhere the purchase price should not bean operative consideration. CaveatEmptor!

What is money laundering?Money laundering is the criminal prac-tice of filtering “ill-gotten gains” or“dirty” money through a maze or seriesof transactions, in an effort to “clean”these funds and make them appear tobe proceeds from legal transactions.Money laundering does not alwaysinvolve cash transactions at every stageof the money laundering process. Anytransaction conducted through theRMLO has the potential to constitutemoney laundering.

Although money laundering is adiverse and often complex process, itoften involves three independent steps,which at times occur simultaneously:

� Placement: The process of placing,through deposits, assets, or othermeans, unlawful cash proceeds withtraditional financial institutions.

� Layering: The process of separatingthe proceeds of criminal activityfrom their origin through the useof layers of complex financialtransactions, such as convertingcash into traveler’s checks, moneyorders, wire transfers, letters ofcredit, stocks, bonds, mortgages, orpurchasing valuable assets, such asart or jewelry.

� Integration: The process of using anapparently legitimate transaction todisguise the illicit proceeds, allowingthe laundered funds to be disbursedback to the criminal. Different typesof financial transactions, such assham loans, or through legitimateresidential mortgage loan transac-tions, may be used to consummatethe integration.

Actually, any transaction that couldbe or appears to be linked to a com-mon scheme may be considered suspi-cious activity.

Minimum programrequirements5

The following four initiatives must be

implemented on and after Aug. 13,2012:

1. Establish a written policy and setof procedures Each RMLO is required to develop andimplement a written anti-money laun-dering program that is reasonablydesigned to prevent it from being usedto facilitate money laundering or thefinancing of terrorist activities. The AMLProgram must be approved by seniormanagement. Be advised: An RMLO must make its writ-ten, anti-money laundering programavailable to the Financial CrimesEnforcement Network or its designee,upon request.

� Program parametersIncorporate policies, procedures,and internal controls based upon theRMLO’s assessment of the moneylaundering risks associated with itsproducts and services. Policies, pro-cedures, and internal controls devel-oped and implemented by a loan orfinance company should includeprovisions for integrating the compa-ny’s agents and brokers into its AMLProgram, and it should obtain all rel-evant customer-related informationnecessary for an effective AMLProgram.

2. Designate a BSA Officer who willbe responsible for ensuring that:(a) The AML Program is implemented

effectively, including monitoring thecompliance of the company’s agentsand brokers with their obligationsunder the program.

(b) The AML Program is updated, as neces-sary.

(c) Appropriate persons are educatedand trained in SAR regulation requirements.

(d) Training is provided or arranged.(e) Testing is arranged.

3. Provide for on-going training ofappropriate persons concerning theirresponsibilities under the program: AnRMLO may satisfy this requirement withrespect to its employees, agents, andbrokers by directly training such per-sons or verifying that such persons havereceived training by a competent third-party with respect to the loan productsand services offered.

4. Arrange for testing to monitor andmaintain an adequate program, includ-ing further testing to determine compli-ance of the company’s agents and bro-kers with their obligations under the AMLProgram: The scope and frequency of thetesting should be commensurate with therisks posed by the company’s loan prod-ucts and services. Such testing may beconducted by an independent third partyor by any officer or employee of the com-pany, other than the BSA Officer.6

Risk assessmentRMLOs should conduct an assessment ofthe overall risk for money laundering.To determine such risk, the following

questions are important:� What are the RMLO’s products and

services?� Who are the RMLO’s customers?� What information is understood

about the RMLO’s customers?� Which geographic locations and

locations of the customers affect theRMLOs risk profile?

Risk profile reviewManagement should follow all guidanceoffered by the RMLO’s federal regulatorand/or the Financial CrimesEnforcement Network (FinCEN) concern-ing money laundering risks.

A risk assessment should be updatedand documented from time to time, butno less than every 18 months. Anychanges to a company’s risk profileshould be reported to management,and internal controls to identify andmitigate risk must be implemented.

Monitoring for suspicious activityThe RMLO’s management must instituteprocedures which are designed todetect money laundering. Managementshould identify high-risk accounts in thecompany’s loan production or portfolio,by using various methodologies, such asaccessing a federal banking agency’slist, a GSE exclusionary list, or other listsof prohibited and restricted parties. Inparticular, management should enableAML due diligence procedures relatingto customers who apply for a mortgageloan product.

The AML Program is intended tocover initial purchase money loans andtraditional refinancing transactionsfacilitated or originated by RMLOs.Furthermore, FinCEN expects thatRMLOs participating in transactionsinvolving funds or programs under theTroubled Asset Relief Program and sim-ilar federal programs, or a state housingauthority or housing assistance pro-gram, will follow the AML Program andfile SARs to the extent that any transac-tions conducted by the RMLO could rea-sonably be considered to be extending aresidential mortgage loan or offering ornegotiating the terms of a residentialmortgage loan.7

Management and the BSA Officershould create certain reports to monitorfor potential suspicious activity transac-tions. Furthermore, all affected employ-ees ought to receive adequate internalor external training on detecting moneylaundering and other illegal activities.

I would advise management torequire the on-going use of certainsearch engines and applications per-taining to all residential mortgage loanoriginations, in order to monitor for fil-ing suspicious activity reports (i.e., suchas LexisNexis, Interthinx, OFAC screen-ing through Credit Reporting Agencies,and so forth).

Suspicious activity reportingIf any company employee becomesaware of or suspects criminal activity byeither the company’s customers or

employees, the employee shouldpromptly report the matter to the BSAOfficer. The BSA Officer is then requiredto investigate the matter further todetermine whether to report the suspi-cious activity to FinCEN. The investiga-tion should be based on an objectiveconsideration of the facts, as submittedby the employee and uncovered in thecourse of the BSA Officer’s review.

Generally, supporting documenta-tion may not need to be immediatelyfiled along with the SAR when it is sub-mitted to FinCEN, but the companyshould maintain all documentationthat supports the facts and circum-stances of the SAR review in a specialSAR folder, restricted to only specific,need-to-know individuals, and alsokept either in hard copy or on comput-er disk, CD, or on anti-money launder-ing software.

The RMLO is not obligated to investi-gate or confirm the underlying crime(i.e., terrorist financing, money laun-dering, tax evasion, identity theft, andvarious types of fraud). Investigation isthe responsibility of law enforcement.

When evaluating suspicious activityand completing the SAR, the RMLOshould endeavor to identify the charac-teristics of the suspicious activity to thebest of its ability. After filing the SAR, alldocumentation related to such filingmust be retained for five years from thedate of the filing.

SAR disclosure—prohibitionNo director, officer, employee, or agentof an RMLO that reports a suspicioustransaction is permitted to notify anyperson involved in the transaction thatthe transaction has been reported toFinCEN through filing the SAR. Any per-son subpoenaed or otherwise request-ed to disclose a SAR or the informationcontained in a SAR, except when suchdisclosure is requested by FinCEN or anappropriate law enforcement or federalbanking agency, must decline to pro-duce the SAR or provide any informa-tion that would disclose that a SAR hasbeen prepared or filed.8

Many RMLOs have had some diffi-culty understanding this provision.The BSA Officer and any other staffaware of the possibility of a suspiciousactivity must keep such informationconfidential. Actual SARs are also tobe kept confidential. Any person sub-poenaed or otherwise requested todisclose a SAR or the information con-tained in a SAR should decline to pro-duce the information and seek theadvice of legal counsel.

If the company determines it is nec-essary to report a suspected illegalactivity to local law enforcementauthorities, or has been told to do so byFinCEN, the BSA Officer should carefullyreview all known facts. SARs may befiled when there is a reasonable basisfor believing that a specific crime hasoccurred, is occurring, or may occur.

FinCEN and regulators should be


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notified of any subpoena or request todisclose the SAR, as well as the compa-ny’s response thereto. Furthermore,FinCEN and, if applicable, the compa-ny’s regulator fully expect that theRMLO’s internal controls for SAR filinghave substantively minimized the riskof such disclosure. Thus, the RMLOshould maintain appropriate means toprotect the confidentiality of SARs.

FinCEN guidance does not require anRMLO to share a SAR with a corporateaffiliate other than a controlling com-pany or head office. However, in orderto manage risk across a company’s cor-porate structure involving corporateaffiliates, the company should deter-mine that when a SAR is filed the infor-mation underlying a SAR filing may bedisclosed, under certain, narrowlydefined circumstances, to the BSAOfficer of its corporate affiliate.

Safe harbor from liabilityFederal law9 provides protection fromcivil liability for all reports of suspicioustransactions made to appropriateauthorities, including supporting docu-mentation, regardless of whether suchreports are filed pursuant to the SARinstructions.

Specifically, the law provides that afinancial institution and its directors,officers, employees, and agents thatmake a disclosure to the appropriateauthorities of any possible violation oflaw or regulation, including a disclo-sure in connection with the preparationof SARs:10

“Shall not be liable to any person underany law or regulation of the UnitedStates, any constitution, law, or regula-tion of any State or political subdivisionof any State, or under any contract orother legally enforceable agreement(including any arbitration agreement),for such disclosure or for any failure toprovide notice of such disclosure to theperson who is the subject of such disclo-sure or any other person identified in thedisclosure.”11

This safe harbor protection appliesto SARs filed within the required report-ing risk profile thresholds of the RMLO’sAML Program, as well as to SARs filedvoluntarily on any suspicious activitybelow those threshold parameters.

Examination and enforcementInitially, the Internal Revenue Service(IRS) has the delegated authority toexamine for compliance with FinCEN’sregulations since RMLOs do not have afederal function regulator.

FinCEN has announced that it willdetermine whether other state and fed-eral agencies, such as the ConsumerFinancial Protection Bureau (CFPB) andthe federal banking agencies, shouldalso have examination authority.

If FinCEN further delegates examina-tion authority, it has stated its commit-ment to work with the other relevantregulatory agencies to develop consis-tent examination procedures.12

TrainingThe BSA Officer must conduct orarrange for annual meetings with allaffected employees and other companypersonnel who handle any aspect of res-idential mortgage loan transactions, inorder to keep them informed of any newchanges to FinCEN requirements or anylaws and updates that may affect thecompany’s AML Program. It is also theresponsibility of the BSA Officer to seethat all employees are trained in AMLcompliance at the time of their initialemployment. Additional meetings orother training should be held, as neces-sary, to address AML news and processconcerns that arise in the interim.

Training may be conducted throughpresentations at a meeting, circulationof memoranda or other written materi-als, or any other suitable manner ofdelivery. Training may be internal orexternal. A copy of all training materialspresented or circulated should beretained by the BSA Officer along with awritten record of attendance by affect-ed personnel.

At least once per year, the BSA Officershould attend an external training ses-sion or conference relating to the BankSecrecy Act, fraud detection, or moneylaundering.

TestingThe RMLO may use the services of anindependent, external auditor to reviewits policies, procedures, and processes,and test the overall compliance withstatutory and regulatory requirementsfor monitoring, detecting, and report-ing suspicious activities. An internalauditor may conduct the testing, solong as the BSA Officer is not involved inthe audit and due diligence process.

The testing itself should include, butneed not be limited to, certain aspectsof compliance with SAR regulations,especially providing an audit scope thatcontains the following elements:

� Identification of Unusual Activity� Transaction (Manual Transaction)

Monitoring� Surveillance (Automated Account)

Monitoring� Managing Alerts� SAR Decision Making� SAR Completing and Filing� Transaction Testing

Required reportingEvery RMLO must file a report withFinCEN of any suspicious transactionrelevant to a possible violation of law orregulation. An RMLO may also file withFinCEN a report of any suspicious trans-action that it believes is relevant to the

possible violation of any law or regula-tion, but whose reporting is notrequired.

A transaction requires reporting if itis conducted or attempted by, at, orthrough an RMLO if the transactioninvolves or aggregates funds or otherassets of at least $5,000, and the RMLOknows, suspects, or has reason to sus-pect that the transaction (or a pattern oftransactions of which the transaction isa part):

1. Involves funds derived from illegalactivity or is intended or conducted inorder to hide or disguise funds orassets derived from illegal activity(including, without limitation, theownership, nature, source, location orcontrol of such funds or assets), aspart of a plan to violate or evade anyfederal law or regulation or to avoidany transaction reporting require-ment under federal law or regulation.

2. Is designed, whether through struc-turing13 or other means, to evade anySAR filing requirements or any otherregulations promulgated under theBSA.

3. Has no business or apparent lawfulpurpose or is not the sort of activityin which the particular customerwould normally be expected toengage, and the RMLO knows of noreasonable explanation for thetransaction after examining theavailable facts, including the back-ground and possible purpose of thetransaction.

4. Involves the use of the RMLO to facil-itate criminal activity.

More than one RMLO may have anobligation to report the same transac-tion, and other financial institutionsmay have separate obligations to reportsuspicious activity with respect to thesame transaction. In those instances, nomore than one report is required to befiled by the RMLO and other financialinstitutions involved in the transaction.However, out of an abundance of cau-tion, the RMLO should file a SAR when ithas reached the decision to file a SARwith FinCEN.

Timing for filing SAR ReportsThe SAR rules require that a SAR be filedno later than 30 calendar days from thedate of the initial detection of facts thatmay constitute a basis for filing a SAR. Ifno suspect can be identified, the timeperiod for filing a SAR is extended to 60days. The time period for filing a SARstarts when the RMLO knows or has rea-son to suspect that the activity or trans-actions under review meet one or moreof the definitions of suspicious activity.

The phrase “initial detection” shouldnot be interpreted as meaning themoment a transaction is highlighted forreview. There are a variety of legitimatetransactions that could raise a “red flag”simply because they are inconsistentwith normal account activity. The 30-day (or 60-day) period does not beginuntil an appropriate review is conduct-

ed and a determination is made thatthe transaction under review is “suspi-cious” within the meaning of FinCEN’sSAR regulations.

In any event, the review should becompleted in a reasonable period oftime.

What constitutes a “reasonable periodof time” will vary according to the factsand circumstances of the particular mat-ter being reviewed and the effectivenessof the SAR monitoring, reporting, anddecision-making process. The key factorsare that the RMLO has (1) establishedadequate procedures for reviewing andassessing facts and circumstances identi-fied as potentially suspicious, (2) thatthose procedures are documented, and(3) followed in accordance with SAR regu-lations and the company’s AML Program.

For situations requiring immediateattention, in addition to filing a timelySAR, the company should immediatelynotify, by telephone, an “appropriatelaw enforcement authority” and, asnecessary, the company’s own primaryregulator or state banking department.

For this initial notification, an“appropriate law enforcement authori-ty” would generally be the local officeof the IRS Criminal InvestigationDivision or the Federal Bureau ofInvestigations. However, notifying lawenforcement of a suspicious activitydoes not relieve an RMLO of its obliga-tion to file a SAR.

For suspicious activity related to ter-rorist activity, an RMLO may also callFinCEN’s Financial Institutions Hotlineat the toll-free number (866) 556-3974(seven days a week, 24 hours a day) tofurther facilitate the immediate trans-mittal of relevant information to theappropriate authorities.

The Hotline provides law enforce-ment and other authorized recipientsof SARs information with details of thesuspicious activity in an expedited fash-ion. Using the Hotline is voluntary andis not a substitute for the responsibilityto file a SAR in accordance with appli-cable regulations.

Red flagsThe Federal Financial InstitutionsExamination Council (FFIEC) provides aBank Secrecy Act/Anti-Money LaunderingExamination Manual in which may befound a list of “Red Flags” associated withMoney Laundering and TerroristFinancing.14 This list is not comprehen-sive and it is updated from time totime. However, many of these Red Flagsare not specifically relevant to RMLOtransactions.

In addition, the RMLO may utilizethe 26 red flags list of identity theftdetection compiled by the FederalTrade Commission (FTC), and adoptedthrough interagency guidelines, in theguidelines implementing Section 114and Section 315 of the Fair andAccurate Credit Transactions Act of2003 (FACTA).15

And, as indicated above, varioussearch engines and lists are available tohighlight or identify potential incidentsof suspicious activity.

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Using the FFIEC list, I will provide abrief sampling of the types of red flagsthat may be involved in RMLO transac-tions. Keep in mind that this list is byno means all-inclusive, but only illus-trative. It offers some insights intowhere Examiners recognize possiblemoney laundering and terrorist financ-ing schemes.

The mere presence of a red flag isnot by itself evidence of criminal activi-ty. Closer scrutiny should help to deter-mine whether the activity is suspiciousor one for which there does not appearto be a reasonable business or legalpurpose.

� Insufficient or suspicious information� A customer uses unusual or sus-

picious identification documentsthat cannot be readily verified.

� A customer provides an individ-ual tax identification numberafter having previously used asocial security number.

� A customer uses different taxidentification numbers with vari-ations of his or her name.

� A customer’s home or businesstelephone is disconnected.

� The customer’s background dif-fers from that which would beexpected on the basis of his orher business or employmentactivities.

� A customer makes frequent orlarge transactions and has norecord of past or present busi-ness or employment experiencethat may substantiate andexplain the transactions.

� Funds and asset transfers� Many funds transfers are sent in

large, round dollar amounts,without adequate explanation orverifiable sourcing.

� Source of funds in asset state-ments occurs to or from a finan-cial secrecy haven, or to or froma higher-risk geographic locationwithout an apparent businessreason, or the activity is inconsis-tent with the customer’s businessor employment history.

� Large, incoming funds transfersare received from a foreign entity,with little or no explicit reason ordocumentable explanation.

� Funds transfer activity in assetstatements is unexplained, repet-itive, or shows unusual patterns.

� Payments or receipts are evi-denced with no apparent links tolegitimate contracts, businesses,employment, goods, or services.

TrainingAs mentioned above, the AML Programtraining may be conducted on an inter-nal or external basis. Whatever thechoice, the training should at least con-sist of the following topics:

� What is anti-money laundering?� What are the customary red flags?� Which government agencies are

involved in AML compliance?

� How is suspicious activity reportingimplemented?

� What are the typical money launder-ing typologies?

� How to complete a SAR?� What is a customer identification

program?

In my view, there are certain learn-ing objectives to a viable training for-mat.

These are the goals that my firmseeks to accomplish through our AMLtraining:

� Understanding money launderingand the adverse effects on mortgageprofessionals.

� Exploring the Bank Secrecy Act,including the general history, objec-tives, coverage, requirements, andpenalties for violations.

� Briefly taking a look at the USAPatriot Act, specifically its coveragein relation to RMLOs.

� Examining the role of governmentagencies in the prevention of moneylaundering.

� Reviewing the requirements of anappropriate Anti-Money LaunderingProgram.

� Outlining the types, detection, andpotential presence of suspiciousactivity.

� Analyzing risk management andinformation sharing protocol.

� Discussing educational opportunitieshosted by FinCEN or offered throughother venues.

SAR narrative: “The Five Ws”If I were to choose the central feature ofthe SAR, I would select the SAR narra-tive. Each SAR requires a narrative to beprovided by the SAR filer. Over time, myfirm has compiled numerous examplesof common patterns of suspicious activ-ities from our audit and due diligencereviews. Based on our experience, webelieve that there are five interrogativecategories to be considered when writ-ing a SAR narrative: Who? what? when?where? and why? The method of opera-tion (or how?) is also very important andshould be included in the SAR narrative.

� Here are “The Five Ws” to the SARnarrative1. Who is conducting the suspicious

activity?2. What instruments or mechanisms

are being used to identify the sus-picious activity?

3. When did the suspicious activitytake place?

4. Where did the suspicious activitytake place?

5. Why does the filer think the activ-ity is suspicious?

FinCEN suggests that the RMLOdescribe briefly its industry or business(i.e., mortgage banker, mortgage bro-ker). Then describe, as fully as possible,why the activity or transaction is unusu-


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Each month, National MortgageProfessional Magazine focuses on one ofthe industry’s top players in our“Mortgage Professional of the Month”feature. This month, we had a chance tochat with Jonny Fowler, director ofnational production at America’s ChoiceHome Loans LP (ACHL), based inHouston, Texas. ACHL has been in busi-ness since 1998 and is an expanding,full-service mortgage banker withbranches nationwide.

Jonny Fowler is the Harley-Davidson-riding son of a Texas oil field worker, aformer competitor in the mixed-martialarts contest known as the Texas ToughMan Competition and a passionate voiceon behalf of the industry he cares sodeeply about.

We recently had a chance to catch upwith Fowler and avoid a submission holdlong enough to get a few questionsanswered. Fowler’s story is a familiarone to those of us who have been in themortgage industry for more than 15years. With inspiration from role models,hard work and dedication to his indus-try, Fowler built a successful career thathas provided a life that he wasn’t surewas possible.

Tell us about your background.I was born in Texarkana, Texas onAugust 12, 1968. My father is fromHope, Arkansas and my mother wasoriginally born in New Orleans, La.and grew up in New Iberia, La. WhenI was very young, must have beentwo- or three-years-old, my parentsmoved from Texarkana to theHouston area for my father’s work. Igrew up in Houston, and have beenin the Houston area ever since. I fol-lowed in my father’s footsteps for anumber of years in the oil fieldindustry.

What sort of activities do you takepart in when away from the office?Nowadays, I’m too old for most of thehobbies I used to be into, and toobeat up! I used to do different thingsin martial arts. I used to do what theycalled the Texas Tough Man Contest,competing in mixed-martial artstournaments and things like that.

I used to ride dirt bikes but now Ijust ride Harleys. They’re much more

stable and slower. Now, I enjoyspending time with my family. I’mone of those guys that I’m ready foranything at a moment’s notice, all Ineed to do is pack my toothbrush andI’m ready to go.

Why did you enter the mortgageindustry to begin with? Was itplanned, accidental or did you see anopportunity to make a lot of money? In 1994, I bought my first house. Ihad owned a condo before that wasowner-financed, but I financed myfirst house with a traditional mort-gage. I met with a loan officer, onetime and never saw him again. Infact, I never heard from him again.He wouldn’t return any of my phonecalls. I also talked to a processor, whobothered the heck out of me andcalled me at least two or three timesa day for a month. She never seemedlike she could get her act together.She would call every day asking forone thing at a time in piecemeal fash-ion and I got frustrated. Later on, Ifound out that a lot of people in thatposition get frustrated. At one point, Iremember asking her, “Can’t you putall of these things on a list and give itto me at one time so I can look foreverything at once?” I rememberthere being silence on the phone.

What specifically is it about the mort-gage business that appealed to you?With the mortgage industry, you havea more intimate relationship with thepeople you are trying to help. Notonly that, but I really enjoyed work-ing with the first-time homebuyer.There were so many people whom Icould help. That’s why I decided toget into the mortgage business full-time and make it my life choice andcareer.

Do you have any role models in theindustry? What did they teach you?I was 17-years-old and still in highschool and working at a gas stationpart-time. I went to work for a Greekman whose name I could never spell.He went by “Sandy.” One time, he wastrying to find something that hadbeen lost in the gas station. Helooked at me told me to go jump inthe dumpster and see if I could findit. I looked at him like he was crazyand he repeated it. I told him, “No,I’m not going in a dumpster.” I thenwatched this man that had a lot ofmoney, a lot of friends, with every-thing going great in his life jump inthat dumpster and search that dump-ster to find what he was looking for.When he got out, instead of scream-ing at me, instead of firing me, any-

thing like that, he came up and helooked me in the eye and said, “I willnever ask you to do something that Iwouldn’t do myself.” And from thatmoment on, everything that thatman did stuck with me. I have triedto emulate a lot of what he instilledin me.

The other role model I would high-light is Sandra Wiley, former seniorvice president at Allied in charge oftraining. I started working withSandra when I was 30-years-old Ithink. Sandra has this demeanorabout her. She is always calm, cooland professional. If you are willing toopen your ears and close your mouth,she tries to help and teach and guideyou. She is very much like a guidancecounselor, a school teacher, some-body that I’m so proud to haveknown in my life. Whether she knowsit or not, she will always be a mentor,with her management style. She isthe type of human being that I wouldlike to emulate myself. Currently,Sandra is corporate trainer and com-pliance manager for Service FirstMortgage in Richardson, Texas.

What role does technology play in themortgage business?Effective technology that improvesthe efficiency and accuracy of theorigination process is crucial.However, you only get one time tomake a first impression. Technologycannot replace personal relation-ships, and technology will neverreplace a handshake or an eye-to-eyesit-down and visit.

What do you feel is the best environ-ment for an originator?I say a branch-type company, for meanyway, and for a lot of the people Iknow, would be the best place.Because originators have an advan-tage with the backing of a goodbranch company, that has their eyeon compliance, has their eye on themarket, has their eye on what’s goingon in the industry. As part of a well-run branch firm, the road is basicallyopen to them to be able to bring thecustomers in their area the best prod-

Jonny Fowler, Director of National ProductionAmerica’s Choice Home Loans

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

“Technology cannotreplace personal relationships, andtechnology will neverreplace a handshakeor an eye-to-eye sit-down and visit.”


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that shows that while mortgage fraudrates among industry professionals weredown in 2011, there is evidence of signif-icant increases in potential collusionfraud activity in the past three years.The LexisNexis 14th Annual MortgageFraud Report, formerly known as theMortgage Asset Research Institute(MARI) Report, examines the currentstate of subscriber-verified residentialmortgage fraud and misrepresentationin the U.S. committed by industry pro-fessionals, based on data submitted byLexisNexis Mortgage Industry DataExchange (MIDEX) subscribers.

Based on incident reports submittedby MIDEX subscribers prior to 2009, evi-dence of collusion by professionals in themortgage industry was relatively consis-tent at just below five percent of all loanoriginations. Seven percent of loans orig-inated in 2009 were reported with evi-dence of collusion. That percentagejumped to 9.7 percent for 2010. Lastyear’s number was down to 6.8 percent,still slightly above historic levels.

LexisNexis utilizes MIDEX submissionsto develop representative statistics on awide range of mortgage fraud and mis-representation characteristics. TheMortgage Fraud Index (MFI) ranks stateson the incidence of fraud, both in termsof investigations and loan originations.

For 2011, Florida headed the list asthe state with the highest MFI for inves-tigations followed by Nevada, Arizona,Michigan and Rhode Island. In mort-gage originations, New Jersey andColorado topped the list followed byFlorida, Michigan and California.

In addition, closer analysis of themost reported areas for fraud and mis-representation for loans originated in2011 yields five Metropolitan StatisticalAreas (MSAs) that combined represent46 percent of all reports received. Thetop three MSAs were Los Angeles-Riverside-Orange County, Californiawith 16 percent fraud, followed by NewYork-Northern New Jersey-Long Islandwith 11 percent fraud, followed byMiami-Fort Lauderdale, Florida withseven percent.

“Increased levels of fraud and mis-representation in the foreclosure, shortsale, and real estate-owned worldshave pushed the issue of collusion tothe forefront,” said Tom Brown, seniorvice president of financial services forLexisNexis. “Now, more than everbefore, these complex schemes arecoming under increased scrutiny andinvestigators need to pay attention toall parties and relationships in non-arm’s length transactions. Data alone isnot enough to identify fraud. It’s theapplication of linking technologies andanalysis that shines a light on collusionand fraud in general.”

LexisNexis has also created the firstCollusion Indicator Index (CII) to helpthe mortgage industry understand andpinpoint areas of potential collusion

amongst buyers and sellers, savingthem time and resources in investiga-tions to detect and prevent mortgagefraud. The CII ranks states and is ananalysis of deed transfers where it hasbeen determined that there is apotential relationship between thebuyer and seller—particularly when aproperty has been transferred at a sig-nificant loss between relatives andknown associates.

For 2011, Alabama, New York,Kentucky, Pennsylvania, and Indianaranked first through fifth on theCollusion Indicator Index for propertiesexperiencing a 20-95 percent decreasein sales price and mortgage collusionindex. Also in 2011, for properties witha 50-95 percent decrease in sales price,Vermont, West Virginia, Alabama,Pennsylvania, and Louisiana are rankedone through five.

HUD Accepting Apps forthe Purchase of FormerFHA-Insured DistressedLoans Pools

Qualified entitiesinterested in pur-chasing pools ofseverely distressedloans formerly in-sured by the Fed-

eral Housing Administration (FHA) cannow submit applications for theDistressed Asset Stabilization Program,an expansion of an FHA disposition pro-gram that sells pools of defaulted mort-gages headed for foreclosure and pro-vides the opportunity for the purchaserand borrower to avoid a costly foreclo-sure. According to loan pool informa-tion released, approximately 3,500loans will be sold in four metropolitanareas that are among those hardest hitby the foreclosure crisis—Chicago, Ill.;Newark, N.J.; Phoenix, Ariz.; andTampa, Fla.—aligning with other neigh-borhood stabilization efforts to helpthose communities recover as quickly aspossible. The program is part of theObama Administration’s broader strate-gy to encourage public/private partner-ships to stabilize neighborhoods andhome values in critical markets.

Under the program, loans are soldcompetitively at a market-determinedprice generally below the outstandingprincipal balance. FHA then processesan insurance claim, removes the FHAinsurance and transfers the loan to theinvestor. Once the note is purchased,foreclosure is delayed for a minimum ofsix additional months, giving the newservicer time to work through alterna-tives with the borrower, possibly findingan affordable solution to allow the bor-rower to remain in their home. Becausethe loans are generally sold for less thanwhat the borrower currently owes, thepurchaser has the ability to reduce or


nmp news flash continued from page 16

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By Al Crisanty

Like many of you, I recently watched the opening ceremoniesfor the Olympic Games being held in London. I was particu-larly struck by the parade of athletes from 200-plus nations, 81of which had never won an Olympic medal. In their sometimesattractive, sometimes gaudy, outfits they marched into the sta-

dium led by a flag bearer who proudly waved their nation’s symbol for theworld to see before planting it in the ground beside the flags of other nations.This symbolic planting of the flag made a powerful statement: “We are here …We are dedicated to our sport and loyal to our country … We will bring homethe gold!”

As the mortgage industry has faced relentless challenges over the past fiveyears, the wholesale channel has been repeatedly written-off. Yet proud par-ticipants in this competition have repeatedly planted their flag, claimed theright to compete and vowed to meet any obstacle put in their path.

In an expanded piece elsewhere in this edition of National Mortgage Profes-sional Magazine, Mark Greco, president of mid-level wholesale mortgagebanker 360 Mortgage Group, discusses the rationality of the wholesale mort-gage market and how all of the participants have made decisions based ontheir individual best interests. For remaining lenders, serving this channel afterthe departure of the major banks, one decision has been crucial in signaling astrong commitment to the wholesale channel and fortifying broker relation-ships. That decision—this planting of the flag, if you will—was to obtainagency direct status with either Fannie Mae or Freddie Mac and with GinnieMae as well.

Direct Agency Approval status is held by only a few of the mid-level mort-gage banks. It is essential today for a mortgage bank to possess this status ifthey expect to survive. Increased net worth requirements and the lengthy andcomplex agency approval process, means that those mortgage bankers yet toproceed down this path have a difficult road ahead of them.

What is Agency Direct Approval status and why is it so important to mort-gage brokers? Agency Direct Approval status enables a wholesale mortgagebanker to underwrite loan files in accordance with the standards of the gov-ernment-sponsored enterprises (GSEs) that currently comprise the vast ma-jority of the secondary market for residential loans. When a Direct Approvalmortgage bank follows these guidelines in approving loans they are guaranteedthat the agencies will purchase the loans. Simply put, unless a mortgage bankerhas Agency Direct Approval, that mortgage banker cannot guarantee a mar-ket for a loan originated by a broker. Without big banks and their Agency Di-rect Approval, brokers must have relationships with firms who are guaranteedmarket-makers for their loan files.

Wholesale mortgage lending, through experienced, high integrity brokerswill produce the highest quality loans in the market. Together we can marchinto the market place, proudly plant our flag and declare: “We are here to stay… We are committed to supporting our industry and our customers … We willsucceed!”

Al Crisanty is vice president of national wholesale production for 360 MortgageGroup and is responsible for overseeing regional sales managers as the companyseeks to expand operations to all 50 states. Formerly the national wholesale di-rector for Caliber Funding, Al was responsible for the development and expan-sion of Caliber’s wholesale production channel. Additionally, Al served asexecutive vice president of national production for American Home Mortgage,successfully transitioning the 500-member production team from Capital Com-merce Mortgage Company. Al may be reached by phone at (916) 761-1624 or e-mail [email protected].

SPONSORED EDITORIAL

Planting Our FlagDirect approval status guarantees

a market for brokers


modify the loan terms while still making areturn on the initial investment. If noviable alternatives exist, the purchaser maybe able to help the borrower sell the prop-erty through a short sale and avoid thecosts of foreclosure.

FHA began selling distressed single fam-ily loans through what is now theDistressed Asset Stabilization Program in2010 and has successfully sold more than2,100 single family loans to date. An FHA-approved mortgagee can file a claim forFHA insurance benefits and assign the loanto FHA if the borrower is at least six monthsdelinquent on their mortgage; the servicerhas exhausted all steps in the FHA loss mit-igation process; the servicer has initiatedforeclosure proceedings; and the borroweris not in bankruptcy. These assigned loansare then pooled by FHA for resale throughthe Distressed Asset Stabilization Program.

In addition to the standard note sales,the enhanced program features newneighborhood stabilization requirementsto encourage investment in communitieshit hardest by the foreclosure crisis.Approximately 40 percent of the 9,000loans in the sale scheduled for September2012 will be located in Chicago, Ill.;Newark, N.J.; Phoenix, Ariz.; and Tampa,Fla.—four metropolitan areas where highnumbers of seriously delinquent loanscould expand an already large inventory ofreal estate-owned (REO) properties over thecoming months. Designed to help stem theflow of distressed properties hitting thesemarkets, these neighborhood stabilizationrequirements provide that no more than50 percent of the loans within a purchasedneighborhood stabilization pool may besold as REO properties.

All parties seeking to bid on the salepools must first be qualified by the U.S.Department of Housing & UrbanDevelopment (HUD). Parties seeking to bidin the neighborhood stabilization pools arerequired to meet several additional criteriato ensure they will comply with the pro-gram’s goal that fewer homes end up asvacant REO properties in metro areasalready struggling with high numbers offoreclosures. Eligible investors must haveexperience in asset management andproperty management, as well as a proventrack record in helping borrowers seriouslydelinquent on their loans to re-perform orto achieve an affordable alternative toforeclosure. An emphasis will be placed onexperience within the metro area in whichthe bidder is interested.

DOJ Reaches $125 MillionSettlement With Wells Fargoon Lending DiscriminationCharges

The U.S. Departmentof Justice (DOJ) hasfiled the secondlargest fair lendingsettlement in theDepartment’s history

to resolve allegations that Wells Fargo Bankengaged in a pattern or practice of dis-

crimination against qualified African-American and Hispanic borrowers in itsmortgage lending from 2004 through2009. The settlement provides $125 mil-lion in compensation for wholesale bor-rowers who were steered into sub-primemortgages or who paid higher fees andrates than White borrowers due to theirrace or national origin. Wells Fargo willalso provide $50 million in direct down-payment assistance to borrowers in com-munities around the country where theDepartment identified large numbers ofdiscrimination victims and which werehard hit by the housing crisis.

“Wells Fargo is settling this matter sole-ly for the purpose of avoiding contested lit-igation with the DOJ, and to instead devoteits resources to continuing to provide faircredit services and choices to eligible con-sumers, and important and meaningfulassistance to borrowers in distressed U.S.real estate markets,” said an official state-ment from Wells Fargo.

Additionally, Wells Fargo has agreed toconduct an internal review of its retailmortgage lending and will compensateAfrican-American and Hispanic retail bor-rowers who were placed into sub-primeloans when similarly qualified White retailborrowers received prime loans.Compensation paid to any retail borrowersidentified in the review process will be inaddition to the $125 million to compen-sate wholesale borrowers who were vic-tims of discrimination.

The settlement, which is subject tocourt approval, was filed July 12 in the U.S.District Court for the District of Columbia inconjunction with the Department’s com-plaint, which alleges that between 2004-2008, Wells Fargo discriminated by steer-ing approximately 4,000 African-Americanand Hispanic wholesale borrowers, as wellas additional retail borrowers, into sub-prime mortgages when non-HispanicWhite borrowers with similar credit pro-files received prime loans. All the borrow-ers who were allegedly discriminatedagainst were qualified for Wells Fargomortgage loans according to Well Fargo’sown underwriting criteria.

The U.S. also alleges that, between2004-2009, Wells Fargo discriminated bycharging approximately 30,000 African-American and Hispanic wholesale borrow-ers higher fees and rates than non-Hispanic white borrowers because of theirrace or national origin rather than the bor-rowers’ credit worthiness or other objec-tive criteria related to borrower risk.

“Wells Fargo is settling this matterbecause we believe it is in the best interestof our team members, customers, com-munities and investors to avoid a long andcostly legal fight, and to instead devote ourresources to continuing to contribute tothe country’s housing recovery,” saidMike Heid, president of Wells Fargo HomeMortgage. “Wells Fargo takes pride inserving the home ownership needs of allof our customers, and we are fully com-mitted to fair and responsible lending.”

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The complaint alleges that African-American and Hispanic wholesale borrow-ers paid more than non-Hispanic Whitewholesale borrowers, not based on bor-rower risk, but because of their race ornational origin. Wells Fargo’s businesspractice allowed its loan officers and mort-gage brokers to vary a loan’s interest rateand other fees from the price it set basedon the borrower’s objective credit-relatedfactors. This subjective and unguided pric-ing discretion resulted in African-Americanand Hispanic borrowers paying more. Thecomplaint alleges that Wells Fargo wasaware the fees and interest rates it wascharging discriminated against African-American and Hispanic borrowers, but theactions it took were insufficient and inef-fective in stopping it.

The complaint also alleges that, as aresult of Wells Fargo’s policies and prac-tices, qualified African-American andHispanic wholesale borrowers were placedin subprime loans rather than prime loanseven when similarly-qualified non-Hispanic white borrowers were placed inprime loans. The discriminatory place-ment of wholesale borrowers in subprimeloans, also known as “steering,” occurredbecause it was the bank’s business practiceto allow mortgage brokers and employeesto place a loan applicant in a sub-primeloan even when the applicant qualified fora prime loan . In addition, Wells Fargo gavemortgage brokers discretion to requestexceptions to the underwriting guidelines,and Wells Fargo’s employees had discre-tion to grant these exceptions.

The Department began its investigationinto Wells Fargo’s lending practices in 2009and received a referral in 2010 from theOffice of the Comptroller of the Currency(OCC) which conducted its own parallelinvestigation of Wells Fargo’s lending prac-tices in the Baltimore and Washington,D.C. metropolitan areas. The OCC foundthat there was reason to believe that WellsFargo engaged in a pattern or practice ofdiscrimination in these metro areas on thebasis of race or color, in violation of theFederal Housing Administration (FHA) andthe Equal Credit Opportunity Act (ECOA).

J.D. Power Finds OverallSatisfaction With ServicersIncreases

Historically lowinterest rates, com-bined with propri-etary and govern-ment loan modifica-tion programs, have

helped reduce the number of homeownersin distress, according to the latest J.D. Powerand Associates 2012 U.S. Primary MortgageServicer Satisfaction Study. According to thestudy, seven percent of homeowners indi-cate their loan status is “current” as a directresult of a loan modification or other pay-ment arrangement, compared with fourpercent in 2011. In addition, 15 percent ofcustomers say they have concerns keepingmortgage payments current, down from 17percent in 2011.

“Over the past few years, among theprimary reasons for lower levels of satis-faction were challenges in addressing theneeds of customers concerned about mak-

ing their payment or who were alreadydelinquent,” said Craig Martin, director ofthe mortgage practice at J.D. Power andAssociates. “Significant improvements inmortgage servicing, particularly with themethod in which calls are handled, haveimproved customer satisfaction for the firsttime in three years.”

Overall satisfaction with primary mort-gage servicers has increased to 725 (on a1,000-point scale) from 718 in 2011. Thestudy measures customer satisfaction infour areas of the mortgage servicing expe-rience: Billing and payment process;escrow account administration; Web site;and phone contact. Satisfaction in all fac-tors has increased from 2011.

Overall satisfaction among at-risk cus-tomers, those who are behind on theirmortgage payments or are concernedabout making future payments, improvesthe most, increasing by 27 points from2011, compared with non-prime andprime customers (+3 point and -3 points,respectively). At-risk customers are themost likely to contact their mortgage ser-vicer (75 percent), compared with non-prime (41 percent) and prime (32 percent)customers. Satisfaction among customerswho contact their servicer via phoneincreases by 52 points from 2011.

“In the past, satisfaction is typically high-er when customers do not need to contacttheir servicer, which makes the increase inoverall satisfaction among at-risk customersthat much more impressive,” said Martin.“By focusing on improving the contact expe-rience, servicers have been able to improvesatisfaction among customers who are mostlikely to be dissatisfied.”

BB&T (Branch Banking & Trust) rankedhighest in customer satisfaction among pri-mary mortgage servicers for a third consec-utive year, with a score of 803, a 35-pointincrease from 2011. BB&T achieves thehighest scores in three factors: website;escrow account administration; and billingand payment process. Regions Mortgagefollows in the rankings with a score of 779,while SunTrust Mortgage ranks third with758.

The 2012 U.S. Primary MortgageServicer Satisfaction Study is based onresponses from 5,623 customers regardingtheir experiences with their primary mort-gage servicer and was fielded betweenApril and May 2012.

AARP: Record Number ofSeniors Facing Foreclosure

AARP’s Public PolicyInstitute (PPI) hasreleased a new studymeasuring the pro-gression of the mort-gage crisis and its

effect on people age 50 and older. Lookingat nationwide loan-level data for 2007through 2011, the analysis finds that morethan 1.5 million older Americans lost theirhomes since 2007. The study also finds thatthe percentage of seriously delinquentloans—those in foreclosure and loans 90or more days delinquent—increased from1.1 percent in 2007 to six percent as ofDecember 2011 for people age 50 and


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NASN Launches NewMobile Site for Clientsand Appraisers

Nationwide Appraisal & SettlementNetwork (NASN) has announced therelease of its mobile Web site for clientsand vendors on the go. The new mobilesite offers no more waiting for theappraiser to get to an actual computeror to find the time to call and updatefiles. Another added benefit for theirclients on the go is instant communica-tion with the NASN team by either log-ging on or by sending a message rightthrough the mobile site.

“We understand that our appraisersare busy and on the road more oftenthan not. This mobile site gives themthe opportunity to access their files andupdate them while out in the fieldgoing from appointment to appoint-ment,” said Joni Pilgrim, director ofsales and marketing for NASN.

LendingQB ReleasesWhite Paper on MortgageTechnology

LendingQB has announced that it haspublished a free White Paper designedfor lenders that are considering replac-ing their loan origination system (LOS).The Paper addresses the challengeslenders face when evaluating mortgagetechnologies and outlines a strategy toassess their existing technology weak-nesses, identifying areas for improve-ment. Entitled “The Five Steps toMaking Better Technology Decisions,”the White Paper recommends conduct-ing an Enterprise Process Assessment(EPA) of lending operations and work-flows. According to the Paper, all toooften, lenders buy technology predomi-nantly based on features, failing to per-form a critical deep dive analysis oftheir workflow to effectively model andmeasure process enhancements usingstandards and best practices.

“The Five Steps to Making BetterTechnology Decisions” stresses thatbefore buying technology, lenders mustestablish an objective, well-defined,comprehensive process in order to over-come the many challenges associated

with complex technology evaluations.Executing an EPA provides a clearunderstanding of and roadmap for howto select technology that reduces costper loan, improves profitability, maxi-mizes employee productivity anddecrease the number of manual touchpoints throughout the workflow.

Key points in the White Paperinclude: Overview of the mortgagetechnology challenges lenders face intoday’s market; determining the tech-nology lenders really need, avoidingwhat they don’t need; how to arrive atan evaluation readiness checklist; iden-tifying vaporware and avoiding featurebuying traps; using metrics to achieve ahigh ROI; the importance of a seamlessworkflow; and how to reduce cost perloan and increase profitability.

Fannie Mae AnnouncesServicer Training to AssistStruggling Homeowners

Fannie Mae has launched Know YourOptions Customer Care, a customerengagement strategy and training pro-gram for servicers aimed at preventingforeclosures by developing consultativerelationships with struggling homeown-ers. Under the program, Fannie Maepersonnel conduct trainings for ser-vicers’ call center employees, providescripting for interactions with home-owners and help implement ongoingquality control measures.

“Everybody wins when we can pre-vent foreclosure: The servicer, FannieMae, and most importantly, the home-owner and their community,” saidLeslie Peeler, senior vice president,National Servicing Organization forFannie Mae. “What we’ve learnedthrough the housing crisis is that ifeverybody takes the responsibility towork together and act early, then wecan prevent foreclosures and keep fam-ilies in their homes in many cases. Wewant our servicers to be trusted coun-selors to their customers, from atten-tively collecting documents to advisingthem of their options and guiding themthrough the process.”

Fannie Mae has been developing theKnow Your Options Customer Care pro-gram for nearly one year and is alreadyimplementing it with 18 of its largest

By David Rasmussen

Automated valuation model (AVM) accuracy has increased dra-matically in recent years due to model enhancements, the avail-ability of new data sources and a renewed focus on valuation pre-cision. The concept is pretty simple—the more applicable infor-mation that is available, the more accurate the property valuationmodel can be. Additionally, modeling systems and techniqueshave also been enhanced, which has resulted in the creation of

more sophisticated AVMs. This evolution, coupled with valuation-related issues that contributed to the 2008

market crash resulted in a call from industry regulators to heighten the integrity andaccuracy of property valuation testing standards. As part of this effort, regulatorsaddressed the use of AVMs in specific lending applications, and have also increasedexpectations around due diligence through additional regulatory insight added to theInteragency Appraisal and Evaluation Guidelines (Guidelines), initially issued in 1994.

In 2010, the Office of the Comptroller of the Currency (OCC), Federal Reserve Bank,Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), andNational Credit Union Administration (NCUA) revised the Guidelines to more properlyaddress expectations around testing, validation and monitoring of AVMs. Specifically,the Guidelines clearly hold lenders responsible for ensuring third-party valuation serv-ices comply and are consistent with supervisory guidance, including the following:

“An institution should establish policies and procedures that provide a soundprocess for using various methods and tools. Such policies and procedures should …ensure staff has the requisite experience and training to manage the selection, use andvalidation of an analytical method of technological tool. If an institution does not havethe in-house expertise relative to a particular method or tool, then an institutionshould employ additional personnel or engage a third-party.”1

According to the Guidelines, proper testing, analyzing, documenting, implement-ing and monitoring of an AVM cascade are all necessary steps toward compliance.While the Guidelines are impartial as to whether an AVM user should achieve this com-pliance through internal or external sources, it is clear that each present specific andunique challenges. For example, from an internal perspective, many times there is alack of technical knowledge and/or available resources from the valuation staff.Looking for outside resources is usually difficult because of tight budgets.

Regardless of the approach taken, it is critical that AVM users deepen theirunderstanding around AVMs and find an effective way to fully comply with duediligence and regulation compliancy. In my subsequent columns, I will explore thecomplexities in greater detail that AVM users face, as well as provide insight intoapproaches to help mitigate the existing pain points, such as those outlined above.This includes the use of how a properly designed AVM cascade (a solution that posi-tions multiple valuation models according to accuracy) can provide operationalefficiency and optimal compliance.

David Rasmussen is senior vice president of operations at Veros Real Estate Solutions. Formore information, call (714) 415-6300 or visit Veros.com.

Footnote1—Interagency Appraisal and Evaluation Guidelines, Appendix B, page 50. December 2010.

SPONSORED EDITORIAL

Higher Standards Heightenthe Integrity and Accuracy

of Property Valuation

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servicers. One of the key elements ofthe program is creating a single pointof contact (SPOC) in the call center foreach customer to ensure that rapportis built with the homeowner, regularcontact is maintained through the lossmitigation process, and that foreclo-sure prevention options are properlypresented and pursued. Servicers thathave participated in the program havetypically seen 20-30 percent increasesin workouts. We are now making ourtraining available through onlinewebinars and program materials so allservicers may participate and imple-ment Know Your Options CustomerCare. The program is available free ofcharge to servicers.

“Helping homeowners avoid foreclo-sure is our top priority,” said EricSchuppenhauer, senior vice presidentand head of servicing at JPMorganChase, which was one of the first ser-vicers to begin participating in KnowYour Options Customer Care. “When ahomeowner calls Chase, they have asingle point of contact to help guidethem through the process, whetherthey’re seeking a loan modification orother assistance. We are pleased to beworking with Fannie Mae to help morefamilies stay in their homes.”

ISGN Launches Appraisal SmartphoneApp for Gators

ISGN Corporation haslaunched a newsmartphone applica-tion for its Gators

browser-based settlement services andvendor management system designedto assist appraisers, title abstractorsand closing agents out in the field. Theapp soon will be available for theiPhone at the Apple Store where it canbe downloaded. ISGN also plans to sup-port apps for the Android phone, theBlackberry and other smartphone plat-forms. The app enables the vendor toaccept, decline or update orders whileout in the field providing more effi-cient use of their time. The smart-phone app replaces multiple manualtools for appraisers, such as notepads, voice recorders and cameras.The app guides the appraiser throughthe necessary process required tocomplete a home inspection by organ-izing the information and photos ofthe interior and exterior of the home.In addition, the app also can organizethe information and photos neededfor the three comparable homesrequired for an appraisal.

The Gators smartphone app canorganize the appraisal report, generat-ing significant time and cost savings forappraisers. With the app, appraisers atthe end of the day can upload apprais-al data for the appraisal report, includ-ing photos and voice recorded com-ments from their smartphones to theiroffice computer or ISGN’s global pro-cessing facilities and the next morningreceive back the completed appraisalreport allowing appraisers more timeout in the field.

“Gators new smartphone app cancreate huge time savings for appraisers.The app is very detailed and walksappraisers out in the field through whatphotos and information are requiredfor the report, including comps,” saidAnkush Dham, director of technologysolutions for ISGN Corporation. “Withthe app, appraisers don’t have to comeback into the office to accept or denyappraisal orders, greatly enhancing pro-ductivity in the field.”

Cogent Road Enhances Its Roohmz LoanManagement System

Cogent Road has introduced a uniqueenhancement to its Roohmz Mortgage(Enterprise) Management/Loan Produc-tion System—designed to automaticallyassemble loan documents in the correctstacking order to meet investors’ spe-cific requirements. The RoohmzDocument, Shipping and InsuringModule will help eliminate seriousproblems that lenders have facedwhen preparing loan files—incor-rectly organized documents thatresult in delays and other problems.They previously have had to printand organize documents manually, atime intensive process. In addition, ifinvestors subsequently receive theloan file with incorrect documents orin the wrong order, they have tomake the correction.

Using the new Roohmz Module, anunderwriter or other user only needsto make one keystroke to be certainthat all the appropriate documentsare included in the correct orderaccording to investors’ predeterminedrequirements. The system automati-cally adjusts to meet any additionalrequirements for individual loan typesor state agency program guidelines.The Roohmz enhancement also helpseliminate the common problem ofover and under documentation thatoccurs when loan officers and under-writers are uncertain about theamount of documents to be includedin a closing file.

The finished loan package can beready for submittal within minutes,compared to a much longer periodwhen done manually. It can be trans-mitted to investors electronically in aPDF format or printed and shippedvia FedEx.

“For the first time, lenders andinvestors can be assured that all doc-uments will be arranged in the samecorrect order every time regardless ofloan type or state,” said ArmandoRoman, director of professional serv-ices at Cogent Road. “We believe thatthis will provide a major time savingsand improved efficiency in the over-all loan process and ultimately helpensure that lenders receive a higherclosing package ‘grade’ from theirinvestors.”

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LenderMobile UpgradesIts iPad App

LenderMobile has launched several newfeatures for its LenderMobile+ flagshipapplication in response to user feedback,including a new Social Invite featureenabling loan agents to invite real estateagents or borrowers who also are using theiPad app to start a loan transaction in real-time. This new feature creates a powerfullead generation tool for loan originators.Other new features just introduced includenew loan prequalification tools, such aspayment information, front- and back-endratios and loan-to-value ratios (LTV) for theForm 1003, Uniform Residential LoanApplication—information a loan origina-tor needs to make a prequalification deci-sion. The LenderMobile+ app now pro-vides pipeline reporting from the loanagent’s loan origination system (LOS), aGood Faith Estimate (GFE) and mortgagecalculators.

LOs now can invite a real estate agentpartner or a borrower to connect directlywith them via their iPads to start a newloan transaction. On their iPads, realestate agents and borrowers can requestloan prequalification forms and submitthem to originators to start the process.

The LenderMobile+ app also has theability to generate prequalification databased on information entered on the1003 application, such as the loanamount, target rate, income and expens-es. From this data, the app will show crit-ical prequalification information, includ-ing the monthly mortgage payment (prin-ciple and interest) and front-end andback-end ratios. The iPad app’s newmortgage calculators allow originators toeasily enter different borrower scenariosto generate new mortgage amortizationor payment information.

With the iPad app, loan agent users canalso retrieve pipeline information for loansfrom their LOS, including loan status, con-ditions and notes from the loan file.

“Based on our users’ feedback, werealized the need to expand ourLenderMobile+ app to borrowers, whowill ultimately decide how they wish totransact the loan process online,“ saidLovina Worick, vice president of businessdevelopment at LenderMobile. “Our newiPad app features provide loan officers allthe tools for on-the-fly prequalificationcalculations. Before our iPad appupgrade, they had to use a separatedevice to run different loan scenarios forthe borrower. Now all this can be donefrom their iPads. This is especially helpfulfor loan officers who do business face toface. While in front of the borrower,they can take the application, getsigned disclosures and run prequalifi-cation scenarios without needing a lap-top, scanner, printer or fax machine.”

The LenderMobile+ iPad app usescloud computing technology to bring

mortgage origination capabilities to thescreen of any iPad user who has down-loaded the mobile application.Borrowers can electronically sign theloan application directly on the iPad.Loan agents also can order vendor serv-ices from their iPads, such as creditreports and review them in real-timewith borrowers.

Genworth MI AnnouncesSite Upgrade

The U.S. MortgageInsurance (USMI)unit of GenworthFinancial Inc. hasannounced en-hancements to its

customer-facing Web site that substan-tially reduces the number of data fieldsrequired to submit a full-service loan pack-age and receive a mortgage insurance (MI)coverage decision. The Quick Submitoption eliminates redundant data entryand provides a better customer experience,particularly for lenders that currently sub-mit loan documents via email, or on paperusing more costly facsimile transmissionand overnight mail methods. The QuickSubmit option is the latest in ongoing USMIenhancements that have made it easier forall customers to submit contract under-writing, Home Affordable RefinanceProgram (HARP) and “doc-only” full pack-age loan submissions through its intuitive,easy-to-use Web portal, using a single username and password.

Customers using Quick Submit can per-form “one-click” document uploads, evenwhen sending multiple files, and can viewand track the status of every loan, regard-less of how the loan was submitted.

The Quick Submit option allows a cus-tomer that sets mortgage insurance prefer-ences to complete the data fields requiredto initiate submission of a loan for granti-ng of a mortgage insurance decision inabout 60 seconds, and submit the full loanpackage—including required docu-ments—in minutes.

USMI also has increased staffing toensure a smooth transition for customerschoosing the Quick Submit option, so cus-tomers will not experience any change inGenworth’s industry-leading mortgageinsurance decision turn times.

Your turnNational Mortgage Professional Magazineinvites you to submit any informationpromoting new “niche” loan programs,new products or any other announce-ment related to the introduction of anew program, to the attention of:

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

E-mail:[email protected]

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

new to market continued from page 31

First, tell us a little about Hometown Lenders.We started out over 12 years ago as just a small group of friends who want-ed to originate loans together and have fun doing it. It didn’t take longbefore we grew to be the largest lender in our state and then to be one ofthe largest lenders in the South-East. As we grew, we invested in our com-pany and in technology, and we also got very good at supporting all of ourbranches that were spread out all over the South. When we made the deci-sion to become a retail branching operation, it was a logical growth pro-gression as well as a natural extension of our abilities and expertise. Duringour growth, we never lost sight of the fact that we’ve always been a family-oriented business and that our people are what’s most important to us.

How has Hometown Lenders been able to thrive in a time when most of its competitors have closed up shop? We took a different approach, and it paid off. I personally travelled tomeet everyone we hired (or didn’t hire) in person to see if they weregoing to be a good fit with us, and to get a gut feeling regarding the qual-ity of their loan production and personal character. Our position wasthat we would much rather have a branch doing less volume but onethat fit well within our culture so that we didn’t lose sleep at night overtheir loans rather than to have big shops who might originate question-able loans. The outcome for us was that we were able to grow at a con-sistent, measured pace with both big and small branches and achieve alevel of success that was based on a solid foundation of top qualitybranches and producers. From there we were able to invest and supportour branches and then let them do what they do best – close loans.

We’ve noticed your company is growing at a remarkable rate – what’s your secret to success? We strongly believe that it’s not enough to recruit good branches andthen just hope they work out. We firmly believe that recruiting ANDretaining is our top mission, but we also genuinely enjoy developing andgrowing great branches. We have been able to be a catalyst for some sig-nificant growth for our branches, and we have uncovered some amazingtalent. We really enjoy the process and I think that is the real difference.

What else is Hometown doing that other companies are not? Well, I don’t know that no one else is doing this, but one thing we feelvery strongly about is our company-sponsored mission to help selectedvillages in Guatemala. Mission Firefly (www.missionfirefly.org) is a 501Cthat we created to fulfill what we believe is our greater calling in life. Weenjoy giving back, and our people enjoy the opportunity to be a part ofa great mission.

Eric Tishaw is the Chief Operating Officer of HometownLenders. Recognized as a leader in the mortgage industry,Mr. Tishaw was recently included in National MortgageProfessionals “Top 40 under 40” list. With over 12 successfulyears in the business, an MBA, and a lifetime of working inand around the mortgage business, Eric understands exactlywhat it takes to be successful in this industry. Eric Tishaw is

committed to helping the Loan Originators and Mortgage Branch Managersat Hometown Lenders realize their fullest potential by utilizing and shar-ing the skills he has learned and the best practices he has observedthroughout his career.

Q&AWITH HTL

Sponsored Editorial

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older, a more than fivefold increase.“The collapse of the housing market

has been especially painful for olderhomeowners,” said Debra Whitman, AARPexecutive VP for policy.

According to the report, millions ofolder homeowners also remain at risk. Asof December 2011, more than half a mil-lion (600,000) loans were in foreclosureand a similar number (625,000) were 90 ormore days delinquent. Further, as ofDecember 2011, 16 percent of loansbelonging to people age 50 and older—3.5million loans—were underwater, mean-ing the amount owed on the loan isgreater than the value of the property.

“Older homeowners often rely on theirhome equity to finance their needs inretirement—things like health care, homemaintenance and other unexpectedneeds. The fact that so many olderAmericans have no equity at all is trou-bling,” Whitman said.

While the serious delinquency rates arelower for those aged 50 and older than forthose under age 50, serious delinquencieswent up faster for the older populationover the past five years. The study alsofinds that people age 75 and older have ahigher foreclosure rate (3.2 percent) thanthose age 50 to 64 (3.0 percent) or age 65to 74 (2.6 percent).

“More older Americans are carryingmortgage debt than in the past, and theamount of that debt is also increasing,”Whitman said. “Because before-taxincome has decreased on average for peo-ple age 75 plus, while spending for mort-gage interest, property taxes, utilities, andhealthcare have increased, their economicsituation is worsening.”

The study also examines foreclosurerates by race/ethnicity, income bracket,and prime and sub-prime loan type.Foreclosure rates of African-American andHispanic borrowers age 50 and older were3.5 percent and 3.9 percent on primeloans respectively in 2011, nearly doublethat of white borrowers (1.9 percent).Foreclosure rates on subprime loans aremarkedly higher: As of 2011, among thoseage 50 and older, Hispanics had the high-est foreclosure rate at 14.1 percent; Asians13.9 percent, whites 12.8 percent, andAfrican Americans 11.5 percent.

California Rep. McNerneyIntroduces Bill to Speed UpShort Sale Process

Rep. Jerry McNerney(D-CA) has intro-duced legislation,the Fast Help forHomeowners (FHFH)Act (HR 6153), to

help speed up the short sale process. Rep.McNerney’s bill was met with broad bipar-tisan support and industry endorsements.The Fast Help for Homeowners Actrequires a second mortgage lender of afederal mortgage loan to review and makea decision on a short sale agreement with-in 45 days. If the lender does not make a

decision within that time frame, the shortsale will be deemed approved on the 46thday.

“For far too long, the housing downturnhas challenged our region,” said Rep.McNerney. “My bill is one commonsensestep we can take to help shore up the hous-ing market and provide much-neededrelief for homeowners. Our region hasbeen ground zero for the housing crisis,and I am committed to fighting for folks inour communities who have been hit hard.”

The proposed legislation would estab-lish guidelines requiring the primary lienholder to inform secondary and any subse-quent lien holders of a request for shortsale. The bill would also impose a deadlinefor subsequent lien holders to respond toboth the primary lender and the consumerfollowing a short sale request.

“A strong housing market is a crucialpart of getting our economy back on track.The housing crisis has affected homeown-ers, communities, and small business own-ers. Struggling homeowners have heard alot of talk about addressing the issue andwant to see real action, and my bill will dojust that,” said Rep. McNerney.

The Fast Help For Homeowners Act hasbroad industry support, receiving theendorsements of the: National Associationof Realtors (NAR); California Association ofRealtors (CAR); Central Valley Association ofRealtors; NeighborWorks Home OwnershipCenter, Sacramento Region; CaliforniaAssociation of Real Estate Brokers (CAREB);and Stockton NID Housing CounselingAgency.

“As the leading advocate for homeown-ership, Realtors know that issues anddelays with secondary lien holder remainan obstacle to streamlining the short saleprocess,” said NAR President Moe Veissi,broker-owner of Veissi & Associates Inc. inMiami, Fla. “Short sale negotiations aremuch more difficult for borrowers whohave multiple servicers involved and ongo-ing delays continue to severely limit thenumber of homeowners who are approvedfor short sales, forcing many homeownersinto foreclosure.”

The Fast Help For Homeowners Act hasbroad bipartisan support and is cospon-sored by Reps. Dennis Cardoza (D-CA), TomRooney (R-FL), George Miller (D-CA), JimCosta (D-CA), Barbara Lee (D-CA) andRichard Nugent (R-FL).

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

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

E-mail: [email protected]

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

� Flood when the collateral propertylocated outside of a designated floodzone, and the borrower is thereforenot required to carry flood insuranceunder the Flood Act.

� Flood in excess of the limits requiredby the Flood Act.

Available supplements to theMortgage Impairment component ofthe policy may include coverage againstloss to the Mortgage Interest caused by:

(a) Seizure and sale of real property bya governmental agency as a resultof the borrower’s failure to pay realestate taxes, local municipal taxes,or assessments;

(b) Loss of Federal HousingAdministration (FHA), U.S.Department of Veterans Affairs(VA), Small Business Administration(SBA) or private mortgage guaran-tee insurance.

The Mortgage Impairment compo-nent of MIP is written on an occurrencebasis (i.e., coverage is limited to lossesto the Mortgage Interest that occur dur-ing the policy period).

2. Mortgagee’s Errors & OmissionsMortgagee’s Errors & Omissions providesliability insurance coverage to a financialinstitution for claims made against it aris-ing from alleged negligent acts, errors, oromissions regarding property uponwhich it has a Mortgage Interest. The coreelement of Mortgagee’s Errors &Omissions provides coverage to a finan-cial institution against claims allegingnegligent acts, errors, and omissions inprocuring and/or failing to maintaininsurance for Required Perils (as detailedabove). Of particular importance intoday’s housing market, this liabilityinsurance also covers claims alleging afailure to procure or maintain FHA, VA, orprivate mortgage insurance (PMI) onmortgaged property.

Available supplements toMortgagee’s Errors & Omissions mayinclude coverage for claims made

against a financial institution allegingnegligent acts, errors, or omissions in:

(a) The payment of real estate taxesor local or municipal taxes orassessments;

(b) Procuring or maintaining life or dis-ability insurance on the life or healthof the borrower; or (c) Determiningwhether mortgaged property shouldbe covered by flood insurance asrequired by the Flood Act.

The Mortgagee’s Errors & Omissionscomponent of MIP is written on a “claimsmade” basis (i.e., coverage is limited to[a] claims that are made against thefinancial institution for losses during thepolicy period or [b] potential claims thatare reported during the policy period.)

Claims examplesWe have seen two recent claims thatclearly demonstrate how MIP insurancecan contribute to a financial institu-tion’s overall risk management strate-gy. Both of these claims have their gen-esis in the current U.S. housing crisis.

1. Mortgage ImpairmentOur insured was a medium-sized finan-cial institution holding a mortgage loanon a large residential property. The loanwas non-performing when the propertywas destroyed due to a fire, which theauthorities attributed to an act of arson.While there were no charges filed in con-nection with the arson, the homeowner’sinsurer refused to make any paymentunder its policy.

As a general rule, if the fire is provedto be arson by the borrower, the home-owner’s insurer can refuse to pay anyinsurance proceeds under the policy tothe borrower. However, the lendershould always be named as the mort-gagee (the creditor or lender in a mort-gage agreement) under the homeowner’spolicy. As mortgagee, our insured wouldhave a separate right of action to collectunder the policy for the fire damage,

lending institution’s ally continued from page 16

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al, considering the types of productsand services that the mortgage industryor the RMLO offers, and the nature andnormally expected, transactional activi-ties of customers.

� Here is the “how” to the SARnarrativeAlways include the “How!” This is an

important feature of a SAR narrative. � How did the suspicious activity

occur?The narrative section of the SAR

should describe the modus operandior the method of operations of thesubject conducting the suspiciousactivity. In a concise, accurate, andlogical manner, the filer should pro-vide a description of how the suspecttransaction or pattern of transac-tions was committed. As completelyas possible, the SAR narrative shouldoffer a full picture of the suspiciousactivity.

To file or not to fileAfter thorough research and analysishas been completed, findings are typ-ically forwarded to a final “decision-maker.” The RMLO’s AML Programshould already have carefully outlinedprocedures and processes for referringunusual activity from all businesslines to the personnel or departmentresponsible for evaluating suspiciousactivity. Within those procedures,management must establish a clearand defined escalation process fromthe point of initial detection to dispo-sition of the investigation.

The decision-maker, usually theBSA Officer, should have the authorityto issue the SAR filing decision. Whenthe RMLO uses a committee, theremust be a clearly defined process toresolve differences of opinion on SARfiling decisions.

Be sure to document SAR decisions,including the specific reason for filingor not filing a SAR. Thorough docu-mentation provides a record of theSAR decision-making process, includ-ing final decisions not to file a SAR.However, due to the variety of systemsused to identify, track, and report sus-picious activity, as well as the fact thateach suspicious activity reportingdecision will be based on unique factsand circumstances, no single type ofdocumentation is required when acompany decides not to file.

The decision to file a SAR may beviewed as an inherently subjectivejudgment. During banking examina-tions the Examiner will focus onwhether the company has a compre-hensive AML policy and set of proce-dures, and an effective SAR decision-making process. Examiners mayreview individual SAR decisions as ameans to test the effectiveness of theSAR monitoring, reporting, and deci-sion-making process outlined in the

AML Program.In those instances where the RMLO

has an established SAR decision-mak-ing process, whereby AML policies,procedures, and processes reach theconclusion that a SAR should not befiled, the company should not expectto be criticized for the failure to filethe SAR, unless the failure is at signifi-cant variance with FinCEN’s promul-gated AML Program guidelines oraccompanied by evidence of bad faith.

Contacting FinCENThere are several ways to contactFinCEN. The following list provides use-ful contact information, based on thenature of the inquiries.

� General inquiries: (703) 905-3591(Monday through Friday, 8:30 a.m.-5:00 p.m., ET). For the general pub-lic with questions about theFinancial Crimes EnforcementNetwork, its policies and programs.

� Regulatory inquiries: RegulatoryToll-Free Helpline, (800) 949-2732(Monday through Friday, 8:00 a.m.-5:00 p.m., ET). For financial institu-tions with questions relating toBank Secrecy Act and USA PatriotAct requirements and forms.

� Section 314 inquiries: (866) 326-8314 (Monday through Friday, 8:30a.m.-5:00 p.m., ET)

� Section 314 program office:[email protected] or (866) 326-8314.

� Law enforcement inquiries: (703)905-3591 (Monday through Friday,8:30 a.m.-5:00 p.m., ET)

� Financial institutions toll-free hot-line: (866) 556-3974 (seven days aweek, 24 hours a day). For financialinstitutions wanting to report suspi-cious transactions that may relateto terrorist activity. The purpose ofthe hotline is to facilitate theadvance notice of this informationto law enforcement.16

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

Footnotes1—Anti-Money Laundering Program and SuspiciousActivity Report Filing Requirements for ResidentialMortgage Lenders and Originators, Department ofthe Treasury, Financial Crimes EnforcementNetwork, Final Rule, 31 CFR Parts 1010 and 1029,Federal Register 77/30, February 14, 2012.2—Ibid.3—Foxx, Jonathan, “Anti-Money Laundering Debutsfor Nonbanks,” in National Mortgage ProfessionalMagazine, March 2012, Volume 4, Issue 3, pp. 40-434—See 31 C.F.R. § 1010.820.

5—Financial Crimes Enforcement Network, 31 CFRParts 1010 and 1029, Anti-Money LaunderingProgram and Suspicious Activity Report FilingRequirements for Residential Mortgage Lenders andOriginators.6—Failure to comply with the Program require-ments of this section may constitute a violation ofthe Bank Secrecy Act.7—Op. cit. 1.8—31 CFR 103.18(e); 31 USC 5318(g)(2).9—31 USC 5318(g)(3).10—Safe Harbor for Banks From Civil Liability forSuspicious Activity Reporting, FFIEC BSA/AMLExamination Manual, 04/29/10.11—31 USC 5318(g)(3).12—Op. cit. 1.13—Structuring, also known as “smurfing,” is thepractice of executing financial transactions in a spe-cific pattern calculated to avoid the creation of cer-tain records and reports required by law. In practice,

structuring is the breaking up of transactions for thepurpose of evading the Bank Secrecy Act reportingand recordkeeping requirements.14—Appendix F: Money Laundering and TerroristFinancing “Red Flags”, FFIEC BSA/AML ExaminationManual, 04/29/10. See also the “Guidance forFinancial Institutions in Detecting TerroristFinancing” provided by the Financial Action TaskForce (FATF) available at www.fatf-gafi.org. The FATFis an intergovernmental body whose purpose is todevelop and promote policies, both at the nationaland international levels, to combat money launder-ing and terrorist financing.15—12 CFR, Part 41, Supplement A to Appendix J.Federal Register, 72/217, November 9, 2007, SeeAppendix J to Part 222 -Interagency Guidelines onIdentity Theft Detection, Prevention, and Mitigation.16—Financial institutions should immediatelyreport any imminent threat to local-area lawenforcement officials.

anti-money laundering program continued from page 25

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uct, the best pricing, the best turntimes, and the best service. Becauseof that, an originator or branch man-ager is able to make a decent, ormore than a decent, living.

Does the size of the lender matter?Size matters. In different aspects,sometimes size matters. Size can be agreat thing. Size can be a bad thing,it’s all about perspective. The onething that I can say about it is that youneed someone that’s backing you thathas the same philosophies and under-standings that you do as far as sizegoes. I will take quality over quantityany day, but that’s my personal opin-ion. Some people prefer quantityover quality. I prefer quality overquantity.

What troubles you and keeps you upat night?Over-regulation of the industry trou-bles me. We’ve ended up with all ofthese regulators. You’ve now got theConsumer Financial ProtectionBureau (CFPB) and you’ve got thiscomplaint hotline and all of thesethings. The Nationwide MortgageLicensing System (NMLS) was sup-posed to make our lives simpler andeasier. It hasn’t. Sometimes, a personmay be out of work for weeks becausethey’re transferring from one compa-ny to another. I know that’s not whatanyone wants to happen, but it does.

Do you believe that mortgage lendershave been treated fairly in the after-math of the housing crash?I tried to explain to as many people aspossible that I’ve never known a mort-gage broker who has underwritten aloan. I’ve never known a mortgagebroker who developed a loan product.All I ever knew was the people on WallStreet were saying, “This is what we

want, this is what we need and this ishow you do it,” and loan officers andbrokers delivered that.

What are you hopeful about inregards to the mortgage industry?I really think that we can return thisindustry to the profession that itdeserves to be. I’m talking aboutwhere the mortgage banker couldhold his head high … that he wasn’tafraid to say that he was a mortgagebanker or a mortgage broker. Theminute hand is already past sixo’clock, we’re on an upswing, we areour way back up.

What has been your greatest accom-plishment in the industry to date?My greatest accomplishment has beenhelping consumers and helping mort-gage professionals—when, where andhow they needed it. I have helped tobring a tremendous number of peo-ple into this business. I have helpedthem with their lives and their deci-sions. I’ve helped people get intotheir first house … people get intoincome-producing properties—thingslike that. That’s what I’m happiestabout.

Is there anything else you’d like toadd?I really want to take my hat off tothose industry veterans that stuck itout from 2007 forward. There are alot of good people that have lost a lotby staying in this industry justbecause they knew that it was theright thing to do. I take my hat off toall of those people.

David J. Coster is senior editor ofNational Mortgage ProfessionalMagazine. He may be reached by phoneat (919) 559-2171 or [email protected].

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assuming there is no complicity in thecrime.

In this claim, however, our assuredwas not listed as mortgagee in the home-owner’s policy, and the claim (and sepa-rate right of action) was denied by thehomeowner’s insurer. Thus, the follow-ing criteria existed for a covered claimunder the Mortgage Impairment sectionof the MIP policy:

� Physical damage to property as theresult of a Required Peril (i.e., fire);

� The lack, insufficiency, or uncol-lectibility of direct (homeowner’s)insurance; and

� A loss to the insured’s “mortgageinterest” (i.e., the security for repay-ment of their loan that the collateralprovided), resulting from the physicaldamage to the collateral.

This claim may be emblematic of thedire circumstances the economic downturnhas created for some borrowers. The cir-cumstances suggest that the borrower mayhave been so desperate to get out “fromunder” the mortgage loan that he commit-ted arson in order to try to obtain thehomeowners insurance policy proceedsand effectively terminate his mortgageobligation. While, as described above, mostoften a borrower’s actions will not preju-dice a lender’s rights under a direct insur-ance policy, in this case it may very wellturn out to be the case that our Insured has

no viable recourse against the home-owner’s insurer. In such a case, MortgageImpairment insurance may provide theinsured with a second level of protectionagainst loss to its Mortgage Interest.

2. Mortgagee’s Errors & OmissionsDue to the negligence of an employee inthe loan servicing unit, our Insured failedto pay the premium for PMI on severaldozen loans.

While the insured had collected fundsfrom its borrowers to make the premiumpayments, the employee charged withthe responsibility of remitting the pay-ments to the PMI insurers failed to do so.This resulted in the cancellation of thePMI policies. Although upon discoveringthese failures, the insured remitted thefunds to the PMI insurers and requestedthat coverage be reinstated, in certaincases the PMI insurers refused to do so.

Due to the dramatic decline in prop-erty values, and the sustained elevatedlevels of unemployment, half of theseloans have since gone into default.

Each of the defaulted loans withoutproper PMI had been sold to a secondarymarket investor. The amount recoveredon each property through foreclosureand sale has, or is likely to be, insuffi-cient to cover the outstanding mortgageloan balance. The investors looked to ourinsured for recovery of the loss sustainedas a result of its failure to procure PMI,and to date, the insured has agreed toreimburse the investors for their losses,

which amount in total to hundreds ofthousands of dollars.

This claim is a glaring example of theincreased exposure for financial institu-tions due to the housing market crisis. Ina healthy housing market, many of theseloans would be current, and the ultimateloss to the insured would have been sub-stantially mitigated. Additionally, if hous-ing prices had not declined so precipi-tously, many of these loans would not beunderwater and the borrowers wouldhave been able to refinance. In addition,

in a healthy U.S. housing market, theinvestor might very well have recoveredmost, if not all, of the loan balancethrough the foreclosure process. Giventhe sheer number of foreclosed loans,any negligent act, error or omission cannow lead to a catastrophic loss to a finan-cial institution. Having Mortgagee’s Errors& Omissions insurance in place can insu-late a financial institution from bearingthe full impact of such a loss.

ConclusionThese claims examples demonstrate whyMIP insurance is a coverage that lendinginstitutions and servicing institutions canill afford to forgo. In an environment ofhigh levels of delinquency and loomingforeclosures, a financial institution’s expo-

sure to Mortgage Impairment lossesincreases dramatically.

With housing prices bottoming out,many borrowers are underwater on theirmortgage loans and foreclosure levels areat an all-time high. Lending institutionsneed to do everything they can to man-age their risk. MIP insurance can be yourally in this time of economic uncertainty.

Tom Delaney is managing director ofBankers Insurance Service in Chicago, amanaging general underwriter that providesinsurance coverage for residential and com-mercial lender’s and servicer’s mortgagee orowner interest in mortgaged properties. Hemay be reached by phone at (312) 381-3722or e-mail [email protected].

lending institution’s ally continued from page 33

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The Rationality of the Wholesale Lending Market

By Mark Greco

The year was 2005. Nearly 80 percent of allloans originated during this peak year ofthe housing boom were originated bymortgage brokers. What got lost in thepost-bubble chaos and finger-pointing wasan explanation as to why the vast majorityof Americans had sought out mortgagebrokers to handle this most important offinancial transactions. Historically, the rea-son for the dominance of mortgage bro-kers has been the ability to offer the bestcombination of expertise, experience, priceand service. Could it be that American con-sumers in 2012 are re-embracing the mort-gage broker, despite relentless vilificationover the past five-plus years? Could it alsobe true that the recent decision by WellsFargo, the last of the mega-banks, to leavethe wholesale mortgage banking channel,is a natural step in that process?

There is an ancient saying that weshould examine as we consider the would-be re-emergence of the wholesale channelin general and mortgage brokers in partic-ular. The ancient saying is: “A bird can nomore change its feathers than a tiger canchange its stripes.” Simply put, things inthe natural world have to be true to theirown nature. It is not all-together differentin the business world. Individual con-sumers, workers and companies all have tobe true to their own nature and interests.Whether you call this the “invisible hand“of the market like Adam Smith or socialDarwinism, the truth is, that people andbusiness organizations run by people makedecisions that they believe to be in theirbest interests. Those who do the best jobmaking these decisions survive and thrive,while those who don’t inevitably fail.

I believe a fair examination of the mort-gage origination industry over the past fiveyears clearly supports the contention thatthe large banks have made decisions thatare in keeping with their perceived interestsas have mid-level mortgage bankers, mort-gage loan originators and individual con-sumers. Let’s review the past five years andexamine the market dynamics and the deci-sion-making of these market participants.

2008-2009This period was the height of the crisis. Itcame after the implosion of the sub-prime

market the previous year and the bank-ruptcy filings of dozens of mortgagelenders that served that market (or wereunable to restructure given the creditcrunch that developed in August of 2007).The media and the big banks, which wereunder substantial liquidity pressure, beganto point fingers of blame at the mortgagebrokers. A large part of the reason for thepoor performance of loans producedthrough the wholesale channel was thatthe large retail mortgage bankers would“cherry pick” the top quality loans to fundon their warehouse lines. This wouldinsure that their loan portfolio perform-ance was acceptable. They certainly didnot want to turn away any other businessthat had a viable channel for origination sothey would allow their loan officers to bro-ker the stated income and higher risk loansto the likes of Countrywide, Chase,National City, etc. When the collapse came,the statistics indicated that the “bad loans”were originated through the wholesalechannel, i.e., brokers. While these loanswere funded through the bank’s wholesalechannel, they were not necessarily sourcedoriginally by brokers, but by loan officersworking for mortgage bankers. Now thatthe risky products are extinct, and manybrokers have become bankers, the bankswant to pat themselves on the back forcleaning up the industry. It was easy for thelarge banks to single out the group withthe smallest voice, the mortgage brokercommunity.

The year 2008 is when most financialinstitutions around the world discoveredtheir financial stability was in question dueto direct or indirect holdings of sub-primemortgage securities. Scores of small, mid-sized, and even larger, publically-tradedlenders found their warehouse credit linespulled by larger financial institutions andwere forced to close. Tens of thousands ofmortgage industry workers were out ofwork. Many of these out of work were newto the industry (less than five years) andwere hired to support the surging loan orig-ination volumes of the previous five years.

In 2009, the cleansing of the industrycontinued. Foreclosure volume peaked atslightly less than four million filings.Mortgage origination volume actually

increased, due to rate cuts bythe Federal Reserve, andmany former brokers andbroker-based originatorsfound new homes, flockingto either retail mortgagebankers or even big bankretail lending divisions. Forthese originators, respondingto the demonizing of mort-gage brokers and to thedeepest recession since theGreat Depression, by seekingemployment at “favored”banks seems perfectly logical.

As the big banks foundthemselves on the receivingend of billions in taxpayersupport through theTroubled Asset ReliefProgram (TARP), they con-tinued to blame brokers asthe source of the poor qual-ity loans in their portfoliosand to curtail their purchas-es of loans from this source,either through suspensionof business (JPMorgan Chaseon Jan. 13, 2009), or the lay-ering-on of strict underwrit-ing requirements. Forexample on April 6, 2009, Wells Fargoimposed a minimum credit score of 720 forwholesale purchases with less than a 20percent downpayment. They furtherreduced the maximum debt-to-incomeratio they would accept on broker-origi-nated business. Consumers coming tothem through their retail lending channeldid not face these requirements.Consequently the dramatic drop in themarket share of originations by brokers isbased on completely rational decisions byconsumer to use the large banks.

20102010 was the year of new regulation in themortgage industry. The Dodd-Frank finan-cial reform legislation was debatedthroughout the year leaving the mortgageindustry in great flux. Origination volumewas off by 25 percent from the previousyear as the industry, particularly thewholesale segment of the industry, lobbiedfor a place in the new housing finance sys-tem that was being created in the halls ofCongress. The Dodd-Frank legislationbecame law on July 10, 2010 and createdgreat fear about the viability of the whole-sale channel going forward particularlydue to language relating to loan officercompensation and liability for violations of

“anti-steering” and “ability-to-pay” provisions.

Many brokers and bro-ker-based originators con-tinued to migrate to bankretail lending divisions or tocorrespondent lenders dueto the difficulties imposedon brokers and their uncer-tain future. On Oct. 5, 2010,Bank of America took therestriction on third-partyoriginations all the way asthey announced they wereterminating their wholesalechannel.

By 2010, a group of mid-level, non-depository mort-gage bankers had emergedwhich saw an opportunityin the underserved whole-sale segment. These mid-level wholesalers believedthat the traditional advan-tages of wholesale lending(lowest variable cost of loanproduction, best productmix for consumers, bestpricing options for con-sumers, highest service stan-dards for consumers, most

flexibility and greater income potential fororiginators) all still held true despite the reg-ulatory changes. Their focus was to supportthe remaining brokers that were largelymade up of mortgage professionals withlong term experience. They also saw thathaving agency-direct approval status wasessential to support the channel by guaran-teeing a buyer for originated loans. This beton the proven advantages of the wholesalelending model, agency-direct status and thecapability of experienced, successful, entre-preneurial-minded mortgage professionalsalso appears well-placed.

2011This is the year that the future of the mort-gage origination industry began to takeshape. The loan originator compensation(LO) rule was finalized and took effect onApril 5, 2011. Origination volume fell to itslowest point in a decade, and wholesaleproduction fell to its lowest level in 20years in the first quarter of 2011. Mortgageindustry employment fell to its lowest lev-els of the post-crash period, down 257,000or 51 percent from its peak in 2006. Thebrokerage community was now muchsmaller and more experienced. A survey ofmortgage brokers and broker-based origi-nators in 2011 found that 93 percent had

“Now that the bigbanks are gone, themid-level mortgagebankers, that existsolely to serve the

wholesalemarketplace, willgrow the channel

based on theirtraditional

advantages of bettercustomer service, a

commitment totechnological

innovation andadaptability to

changing markets andregulation.”

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been in the industry for longer than fiveyears. Also significant was the fact thatevery broker-based originator was nowlicensed. In relative terms, it was fair to saythat the most experienced, highly-trainedand certified originators worked for mort-gage brokers.

Then something began to happen thatmany did not see coming. Wholesale vol-ume and market share began to rise. Fromits all-time low market share in Q1 of 2011of 6.8 percent, wholesale volume saw steadyprogress: Q2 numbers totaled 7.9 percent,Q3 hit 9.2 percent, and in Q4, it hit the 11.4percent mark. Originators began migratingin some numbers back to brokerages. It hadbecome apparent that the LO compensationrule would not eliminate the ability to func-tion in this environment and that the prod-uct selection, service short-comings andreduced compensation available in largebank retail lending and many correspon-dent operations were significant. Thus, thereturn of licensed originators to the brokerchannel made perfect sense.

2012Wholesale origination volume has contin-ued to increase since the second quarter of2011. Mortgage rates have plummeted,causing a refinancing surge. Additionally,home sales and home values have seenimprovement bringing new purchase loansas well. Finally, revisions to the HomeAffordable Refinance Program (HARP) hasopened the possibility of refinancing tomany formerly non-qualifiers. On May 25,2012, the Mortgage Bankers Association(MBA) upwardly revised its origination vol-ume projection for the year by $200 billion.

The result has been industry-widecapacity issues and dramatically increasedapplication-to-closing time frames. Whileimpacting all channels of loan origination,the retail lending operations of the largebanks appear to be experiencing the great-est delays.

On Feb. 1, 2012 Citi announced itsdeparture from the wholesale originationchannel. Then on July 13, 2012, Wells Fargobecame the last of the big banks toannounce its departure from the whole-sale space. In the case of Wells Fargo, thedecision came immediately following asettlement with the federal governmentover lending discrimination against minor-ity borrowers.

When viewed from the perspective of alarge bank with a large retail branch pres-ence which is experiencing capacity con-straints, major customer service problems,and which has a proven history of failing to

adequately manage its broker relation-ships, the decision to exit this channel isclearly wise.

Five years after the crisis began therehas been a complete vacation of thewholesale mortgage origination channelby the “too big to fail” banks. But thisshould come as no surprise. The largestbanks have always dialed up and downtheir support for the wholesale channelbased on their individual interests at agiven point in time. The simple truth isthat banks value their retail customersfirst, as they should, and never have beenfully committed to wholesale customerswhich represent a very small percentage oftheir overall lending volume. The bigbanks have allowed their best interests toguide them.

Now that the big banks are gone, themid-level mortgage bankers, that existsolely to serve the wholesale marketplace,will grow the channel based on their tradi-tional advantages of better customer serv-ice, a commitment to technological inno-vation and adaptability to changing mar-kets and regulation. With a single focus onwholesale lending, these mid-level lenderswill help produce better quality, betterperforming loans. The mid-level mortgagebankers have also allowed their best inter-ests to guide them.

The mortgage originators that haveremained in the industry have faced agauntlet of criticism, licensing, compensa-tion and service challenges that have madetheir decision to remain in the service ofconsumers needing mortgage financingquite admirable. As they have sought to stayin this valuable service many have soughtemployment in the environment theythought was in their best interest, and in thebest interest of their customers. More andmore, that best interest decision of origina-tors is to work with a mortgage broker.

Consumers always have, and alwayswill choose to get their mortgage financ-ing from that originator who offers thebest combination of expertise, price andservice. As the recent trend and historicalexperience bears out, that best interestdecision for consumers leans in thedirection of mortgage brokers. Therationality of the mortgage market hasresulted in its structure reflecting thebest interests of its participants.

Mark Greco is president of 360 MortgageGroup based in Austin, Texas. He may bereached by e-mail at [email protected] visit www.360mtg.com.

There is no question thatin today’s ultra-competi-tive market, it is para-mount to the success of abroker that they partnerwith lenders that placecustomer service at theforefront of their busi-ness models. Brokersneed an arsenal of differ-ent tools and services tomake them successfuland help grow their busi-ness. Those lenders thatare dedicated to growinga network of quality bro-kers have made invest-ments and have takensignificant measures tomake service the numberone priority. And, brokers who are trulycommitted to providing excellent serv-ice to borrowers seek out lenders thatstrive to provide the same service levelsthat they do.

Now, more than ever, wholesalelenders know customer service is key,but to varying degrees. Good service issomething that all lenders want to pro-vide; some are great at it, okay at it andsubpar or bad at it. So, what should bro-kers look for in a wholesale lender withgreat customer service? Before you startdoing business with a lender and runthe risk of a bad experience and possi-bly losing deals, make a checklist of dif-ferent buckets that you feel would helpyour business be more successful.

Responsiveness and communicationHow responsive is the lender’s overallcustomer service? Ask them how acces-sible their underwriters and processorsare. Are their account executives alwaysprepared to meet your needs? What aretheir average turn times? They shouldobviously be rapid. How long to fundthe loan? The representations you maketo your customers in terms of theirexpectations is very important, and canreflect poorly on you if they aren’t met.Peel back the onion and ask for docu-mented statistics.

Educational andtraining supportToday’s marketplace ishighly fluid and ever-changing. To stay on topof their game, brokersmust be knowledgeableand up-to-speed onindustry happenings thatcan impact their busi-ness—both positively andnegatively. Without keeninsight, you cannot pro-vide good, accurateadvice to your customers.Not many lenders offereducational services tobrokers that help themstay abreast of key thingssuch as new government

assisted programs, regulatory concernsand compliance adherence, marketingstrategies, selling tips, technologyusage, general industry issues andmore. A lender that is committed tocontinually educating its brokersshould offer valuable tools likeWebinars and training sessions, andhave knowledgeable account executiveswho are eager to answer your ques-tions. It is in the lender’s best interest toprovide educational options that willsupport your success. Ask what theyoffer.

Technology toolsThe technology tools a lender providesmakes all the difference. Providing afeature-rich Web portal to brokers is amust. A good broker-facing portalshould be able to instantly return anaccurate decision and price and alongwith the option to lock rates. Can mul-tiple programs all be returned at oncewith the click of a mouse? Key featuresshould include an online 1003, pipelinemanagement, file tracking, conditionsoversight, real-time status views, docu-ment uploads, appraisal ordering, e-signing, ease of communication withthe back-office and integrations withthe broker’s LOS. In addition, these

Look for a Focus on Customer Serviceto Grow Your Business

By Mat Ishbia

“In this market, it’sdifficult for lenders

to grow unless they’retaking good care

of their most valued asset—

their customers.”

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same tools should be available onsmartphone and tablets for brokers toconveniently access in the field. Ask toget a walk-through of their broker por-tal by an account executive.

Issue resolutionThere will always be fires and variousmatters that need immediate attention.What are the lender’s response time andresolution time? Are they organized interms of getting you to the right personwho can quickly address the problemand provide a remedy for it? You need aresponsive lender that can quickly reactto your needs. Can you always reach alive person? Accessibility is a necessitywhen you need immediate answers. Doyour research. Ask around and do nothesitate to contact a lender to see howthey can best service your needs.

Corporate cultureExcellence in customer service starts withthe culture the lender fosters. Lendersthat have a “service-first culture” andmantra throughout the company meansthat their employees have a solid under-standing of the commitment they mustmake so customers feel valued and treat-ed as a priority. Sure, you’ll hear many ofthe same marketing messages fromlenders that purport to be service-orient-ed, but are they really? How do youknow? Ask what the company’s missionand vision is and how they are organized.

Reputation What are other brokers saying about thelender’s service levels? Do your home-work. There are plenty of blogs, discus-sion boards, LinkedIn groups, etc. thatopenly share information—both goodand bad. Use social media and the Webto dig up research before signing up tobe a new broker. Additionally, look fortestimonials from other brokers on thelender’s Web site. If brokers love theservice that is provided, they’ll gladlyoffer testimonials and the lender willwant to aptly display them on their Website, literature, advertising, etc.

Growth The rate of a lender’s expansion in thewholesale arena can be telling as to itslevel of customer service. In this mar-ket, it’s difficult for lenders to grow

unless they’re taking good care of theirmost valued asset—their customers.Look around the Web for statistics, mediacoverage, articles, press releases, etc. thatgive you a sense of their growth rate andprogression. If the company shows solidgrowth in the marketplace and has posi-tive industry perceptions behind theircorporate brand, there’s a reason forthat. Finding those lenders that offer the“above type” of benefits can be challeng-ing in this highly fluid market. To putlender differences into perspective, cre-ate a comparison matrix of the compa-nies you are considering doing businesswith and it will help you decide.

Opportunity knocksBrokers are able to offer more productand pricing options than retail loanofficers can. You have an excellentopportunity to capitalize on being moresolution-oriented in working with bor-rowers. It’s how well you market your-self, the knowledge you have whendealing with borrowers, and the level ofservice you are able to provide, which isonly as good as the trusted go-tolenders you have developed relation-ships with.

Customer service is king. Yourlender(s) of choice should be intenselyfocused on ways to provide a very posi-tive experience in dealing with them thatkeeps you coming back. Lenders that aretruly committed to a service-focused cul-ture fully grasp that nurturing strong bro-ker relationships determines their long-term sustainability and success. In thismarket, lenders live and die by the cus-tomer service sword. Your lender’s suc-cess is your success. Don’t settle for medi-ocrity. Partner with a lender that pro-vides you with the tools and service thatmake you their number one priority.Those originators that cannot providehigh levels of service and responsivenessto borrowers are at a competitive disad-vantage to those that can.

Mat Ishbia is president of Michigan-basedUnited Wholesale Mortgage (UWM), a fast-growing lender dedicated to the wholesalechannel with a companywide emphasis oncustomer service. He can be reached by e-mail at [email protected] or visitwww.uwm.com.

They are all gone. One by one, themajor banks in the U.S. haveannounced their exit from wholesalemortgage banking. It began with Chasein February of 2009, continued withBank of America/Countrywide in 2010,and finished up this year with Citi inFebruary and Wells Fargo in July. Whatdoes it all really mean? Is wholesalemortgage lending doomed for failure ifthe biggest banks in the land don’t viewit as important enough to continue? Icontend that the future of wholesalemortgage banking is actu-ally quite positive … letme explain.

First: Banks areunique financialinstitutions with uniquemotivationsWholesale mortgage lend-ing was never a good fitfor the big banks, and ithas become less so overtime. Whether it was thehistoric focus they haveplaced on their retailchannel and their currentneed to support the retailchannel with maximumavailable resources, theneed to achieve greatercross-sell results, or the desire to reduceliability, the big banks can no longer jus-tify participating in this segment of the“new mortgage origination industry.”

What do I mean by “new mortgageorigination industry?” Simply put, in thepost-real estate bubble, post-sub-primecollapse, post-foreclosure tsunami, post-financial firm bailout world, the mortgageindustry has evolved in ways that arereshuffling the deck of players. Whether itis the Basel III bank capital standards, therepurchase risks of loans previously soldto Fannie Mae, Freddie Mac and GinnieMae, or the regulatory burdens and risksimposed by Dodd-Frank Act and the rule-making and enforcement of theConsumer Financial Protection Bureau(CFPB), the evaluation that banks mustmake of all their activities has fundamen-

tally changed. Wholesale mortgage bank-ing simply doesn’t pass the test for largebanks any longer.

Second: Remaining mortgage bankers will build a better wholesale industryThe remaining mid-sized mortgagebankers are far better suited for build-ing a sustainable wholesale channelthan the big banks. This is because theytend to be regionally based and treat

brokers and their clientswith a great sense of care,because mortgage loansare their only product.This regional focus and co-dependency between bro-kers and bankers will pro-duce highly productiveand highly efficient rela-tionships.

As the “new mortgageindustry” continues toevolve, non-depositorymortgage bankers andtheir broker partners mustcontinue to find new andinnovative ways to provideconsumers with a superiorlending experience. Thiswill likely include morepersonalized service

focused on a detailed assessment of theconsumer’s financial needs and mainte-nance of the historic advantages of maxi-mum choice at minimum cost.

Third: The wholesalechannel will producehigh-quality loansCommitted mortgage bankers, experi-enced mortgage brokers and a new reg-ulatory framework will combine toensure that high quality loans will beoriginated. With the removal of sub-prime and high-risk products from themarket, the clarification of compensa-tion arrangements for loan originatorsand the careful vetting of mortgageoriginators and brokers, the quality ofloans produced in the wholesale chan-nel should equal that of those pro-

Building a Better Wholesale Mortgage Banking Channel

By John Walsh

“Is wholesale mortgage lending

doomed for failure if the biggest banks

in the land don’t viewit as important

enough to continue?”

looking for a focus on customer service continued from page 37

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duced in other lending channels.One of the hallmark concepts of

financial quality control in the financialservices industry is to “know your cus-tomer.” I believe that mortgage brokershave always been in the best position todo that given their proximity to, andshared interests with the consumer.Now with closer relationships withregional mortgage bankers, who areincented to assist their broker partnersto meet higher standards, quality pro-duction will improve.

Of course there is much pending onthe regulatory front that will impact thewholesale market going forward. In par-ticular, the upcoming decisions relatedto defining what a qualified mortgage(QM) is, and what degree of safe-harborwill exist for originators and purchasersof such loans, will bear heavily on themarket. Additionally, the ultimate fateof Fannie and Freddie, and the form ofbacking of the secondary mortgagemarket by the U.S. federal government,will impact the wholesale channel’sfuture to a significant degree.

So those of us who are stakeholdersin the future of the wholesale mortgage

banking channel need to remind ourcolleagues, clients, political representa-tives and regulators of the advantagesour businesses continue to provide forconsumers, including:

� Maximum selection of loan programs� Competitive pricing due to multiple

loan sources� Ongoing process improvement due

to flexible technology posture� Local real estate market knowledge

and expertise� Relationships within the local finan-

cial services community

These advantages that wholesalelending provides for consumers willensure that politicians and regulatorswill preserve a position in the mortgageorigination space for wholesale lending.

John Walsh is president of Milford,Conn.-based Total Mortgage Services.John founded Total Mortgage Services in1997 with a customer-centric approachand a mission of responsible lending. Hemay be reached by e-mail [email protected] or visitTotalMortgage.com.

The Future of the Mortgage Brokerand Correspondent Markets (Part III)

By Andy W. Harris, CRMS

assumptions on somethingthey no longer understand.Wholesale has gone throughunprecedented change fromthe way it was, as have theother origination models.The primary difference isthat mortgage brokersunderstand other opera-tional channels and howthey operate, but they nolonger understand our chan-nel after financial reformand the mass exodus fromthe wholesale marketplace.

We are seeing a trendacross the nation. The newly-appointed Consumer Finan-cial Protection Bureau (CFPB)has divided the industry bybanks and non-banks (ordepositories and non-depositories) when itcomes to federal regulation and the inter-nal departments assigned to each. Anothertrend has been with large depositorylenders exiting the wholesale lending space.This comes from the difficulty in hiring staff,corporate priorities, less profit, etc. Therecent departure of Wells Fargo was due tothe firm facing these similar constraints andno longer finding reason to continue whole-sale operations as only five percent of theirbusiness. However, the comments regardingfair lending by third-party origination (TPO)production alone is ludicrous from those ofus who know the facts.

The departure of Wells will be similar toother big bank departures. Sure, it’s con-cerning based on the continued restrictionof options for the consumer, but overall, itchanges very little. There are many otherwholesale lenders that will pick up the vol-ume and see new opportunities, many ofwhich are still utilizing Wells and the oth-ers through the correspondent market. Ihave seen more wholesale lenders enterour marketplace in 2012 than any otherprevious year in my career. The reason forthis is that wholesale lending is still themost cost-effective way for a creditor tobring their product to market.

As long as correspondent lending ishere, wholesale lending is here. These orig-ination channels are married … untildeath do them part. The only differencebetween retail correspondent and whole-sale correspondent is that one employs theoriginator and the other does not (unlessunder different departments). I feel this isan advantage to the mortgage broker formore product choice, comparison on exe-cution, competition and control in pricing,

and primarily, lack of buy-back risk and significantoverhead which is growingunder new regulatorychanges. We all rely onbanks and correspondentlenders, and I am person-ally appreciative of theirsupport partnership, butexposing the ignorance inretail mortgage origina-tion is important forgrowth.

Common sense isdefined by Merriam-Webster as, “sound andprudent judgment basedon a simple perception ofthe situation or facts.”Here are a few commonsense principals that relate

to retail correspondent and wholesalelending down to the originator level in theprimary market:

� Wake up bankers, you are not a bank.You are not a “direct lender.” You’re an“indirect lender.” Borrowing money from abank does not make you a bank. Thinkshort and soft about that. Retail corre-spondent lending has had an identity crisisfor several years using the term “mortgagebanker,” when in reality, they don’t fallwithin the definition of a bank at all.What’s worse is that they actually use thistitle as a primary sales tool when promot-ing their services. As defined by a diction-ary as well as our federal regulators as a“non-bank,” I would not be surprised if theCFPB bans the use of this term for retailcorrespondent originators. It’s not really abig deal until naive borrowers and realestate agents believe this false representa-tion as being a benefit to them.

� It’s all about systems.If you want to excel and execute your loanfiles, you must have effective and compli-ant processing systems. We are in anagency-run world with the government-sponsored enterprises (GSEs). How you getfrom Point A to Point B means nothing ifyou cannot execute and you’re judged byyour performance and pricing, not by yourtitle. There are good and bad operations inboth retail correspondent and retail mort-gage broker firms, but it’s not about thechannel in which the loan is originated,but the systems that control turn-timesand defines the consumer experience.

“As long as correspondent lending

is here, wholesalelending is here. Theseorigination channelsare married … untildeath do them part.”

“Just because you don’t understand it does-n’t mean it isn’t so.”—Lemony Snicket

With the recent news of Wells Fargodeparting wholesale and the likelihood ofan annoying media response, I could nothelp but again voice some reason into theindustry with another sequel into partthree of this series. Net branch recruiters,branch managers, and wholesale naysay-ers, wipe that drool off your mustache forjust a moment and let’s discuss the impor-tant facts that so many tend to misunder-stand or not fully comprehend.

Some of you may have read my priorarticles on this topic that started in the firstquarter of 2010 during RESPA reform andfollowed up on around loan originator (LO)compensation changes in 2011. Since thattime and nearly three years, later myassumptions and predictions have come to

fruition from the trends and behavior inthe industry. To restate my position again,I support all forms of mortgage originationon every channel, if run with integrity andstrong business ethics. I feel that competi-tion is vital for the consumer. With thatsaid, my articles and opinions tend to leanmore in support of the wholesale smallbusiness mortgage broker as someone wholives and breathes it daily. We’ve taken anunjustified beating in the media and it canget a little annoying.

My passion for wholesale lending hasalways been driven by what it can offer tomy clients and my business that otherchannels simply cannot. More recently, mypassion for wholesale has been fueled bythe deception and inaccuracies fromrecruiters and others in our industry moti-vated by a self-serving agenda, and mygoals of exposing them. The problem isthat these people are making invalid

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� We are in a transactional-basedindustry regarding revenue.

If you don’t close loans, you don’t get paid.If the company doesn’t close loans, they gobankrupt. We don’t have the perks ofresidual or passive income in the mortgageindustry. Fees and revenues are earned byupfront origination fees to the consumer,and/or service release premiums(SRP)/yield spread premiums (YSP) paid tothe creditor through above market rateson closed and funded loans. It’s that sim-ple. If you’re not producing as a mortgageloan originator, than chasing a comp planor short-term base income by jumpingaround originating platforms will notmake you successful. Five-hundred basispoints of zero is still zero … you simplyneed to close more loans.

� Higher overhead means higher ratesand fees.

The highest fixed costs most compa-nies face is obviously payroll. If youhave processing staff, front desk staff,underwriters, compliance managers,non-producing branch managers andowners, minimum asset require-ments, etc. where do you think thismoney come from? While we wishthere was a money fairy flyingaround sprinkling their money dustall over our balance sheets, it’s notgoing to happen unless the companycloses more loans directly throughloan originators. Higher SRPs andhigher rates and fees will alwaysaccompany higher overhead or anowners profit goals.

� There are companies that need orig-inators and companies that wantoriginators.

There is a wrong way and right way toattract talent. Recruiting can be necessary,but it can also be annoying if fear-basedmethods are used. The years 2008 and2009 showed us the worst wave of fear-based and unprofessional recruiting I haveever personally seen. It was tasteless anddestructive. It’s vital that mortgage origina-tors get better educated in this business tomake better choices and not be influencedby those using to choose these methods. Ihave seen several ruin their career andmiss out on huge opportunities for takingthe bait. Non-producing owners needmortgage originators to pay for their salaryand the salary of any non-producingemployee. Get it? Congratulations, you’re ajob creator, call your Congressman and tellthem you’re awesome.

� Higher compensation means higherrates.

Overhead is the base factor in your ratesheets, but the other major adjuster is com-pensation. Whether working for a corre-spondent and negotiating a comp plan orworking for a mortgage brokerage firmnegotiating comp plans with wholesalers,the compensation is built into the SRP orYSP when it comes to the rate sheet youoffer to your client. If one has lower ratesand the same or higher compensation plan,they simply have lower overhead or requireless revenue as a company (assuming theyare paying the bills and are in the black).

� Up-selling rate is old school sub-prime thinking.

I hear it all the time, non-producing man-agers telling loan officers to sell value andservice as an answer to losing business toothers. Listen, value and service is a require-ment for everyone. Rate is simply deter-mined by the bullet points above. Rate maynot be everything, but you need to be aplayer in the market. You’re not going to sellthe same Fannie Mae 30-year fixed at a 0.25percent higher rate than another strongcompetitor with experience. Consumers aregetting smarter, at least the type of con-sumers you want to attract. Why up-sell ratewhen it’s not necessary? Pay attention to themarket and know where you sit.

� Local is better.In an industry involved with the largestfinancial decision a consumer will make,impacting their personal balance sheet con-siderably, being locally based matters.

Having a local presence and understandingof the marketplace and its consumers is veryimportant for any business in our industry.Local mortgage brokers and correspondentlenders are vital to consumers in the mort-gage market and we always need to protectdiversity and choice for a healthy and bal-anced competitive environment.

� The terms “banker” and “broker”are dead, at least the way we per-ceived them.

We are simply “mortgage loan originators.”Times have changed and we all need toadapt to our new mortgage generation.These titles make absolutely no differenceto anyone, including the consumer. Evenour President and regulators are confused,calling bank loan officers “brokers.” Nomore smoke and mirrors and it’s time wework together as “non-depository mort-gage professionals.”

When rates increase and/or when volumedecreases, the comments above will makemore sense to those originating. Refinancesaccount for approximately 70 percent of cur-rent loan transactions nationally, and every-one is either too busy or not paying attentionto the details to put things in perspectivelong-term. Since 2009, we have logged thehighest quality of mortgage loans in our his-tory. I strongly believe that correspondentand wholesale lending has a bright future,but not without effort from all of us to fightbad policy and block unintended conse-quences of proposed regulations.

Heavy regulations and changes are stillto come. Much pressure is being applied tobanks and creditors under the Dodd-FrankAct which can and will negatively impactall origination channels and consumers aswe all know too well. Stay informed withthe CFPB, get involved, and learn on yourown rather than from someone else finan-cially interested by steering your beliefs.Our industry needs more good peoplestepping up to represent and protect ourlivelihood and the consumers we serve.When a person genuinely enjoys their pro-fession and are motivated by their passion,they tend to be more satisfied with theirwork and more psychologically healthy.

Andy W. Harris, CRMS is president andowner of Lake Oswego, Ore.-based VantageMortgage Group Inc. and 2010-2011 presi-dent of the Oregon Association of MortgageProfessionals. He may be reached by phoneat (877) 496-0431 or e-mail [email protected] or visitAndyHarrisMortgage.com.

the future of the mortgage broker continued from page 39

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By Dave Hershman

are uneven in what theydeliver and you can besure compliance is part ofthe package.

There are otherways to providesuch value,including marketing support.How many wholesalersare helping brokers focusupon increasing theirability to provide pur-chase leads to their realestate agents or helpingtheir business-to-busi-ness clients such as realestate agents, financialplanners, CPAs, etc.expand their own sphereof influence?

I have focused upon two things inmy career: Helping loan officersbecome experts in the industry so thatthe can be expert mortgage advisors,and showing loan officers how to mar-ket like an expert. If you think I amfocused upon the word “expert,” youare right. Experts earn more. Expertsdon’t sell—people come to them foradvice. Experts become leaders andwill survive the end of the refinanceboom. Wholesalers, are you experts? Ifyou are not, how can you teach yourmost important clients to becomeexperts?

Expert knowledge andexpert marketing.One without the other is worthless.Experts who cannot market likeexperts will not position themselvesthe right way. Those who market wellbut are not experts will similarly fail.Those who can show loan officers howto provide value to the real estatecommunity as well as alternativereferral sources will position them-selves differently within this industry.If this is not part of your businessmodel, then you will be missing theboat when it sails without refis.

The benefits being anexpert and furtheringexpertise goes beyondmarketing success.Wholesalers around the country com-plain that a typical broker does notknow how to put together a decent

package and they are re-processing loans forthem. How expensive isit to reprocess loans forbrokers who are sup-posed to be processingloans before they aresubmitted? Will you beable to afford to lendthis help when the busi-ness is not so profitable?Where will this leaveyour clients when youhave to withdraw thislevel of support? Andbadgering them to do abetter job is not enough.Experts understand thatthe job they do in appli-cation not only makesthe process smootherfor all concerned and

saves time, but also leads to trueopportunities for more referrals. It isnot just about asking for referrals. Itis about putting yourself in positionto ask.

Lack of quality training is quiteexpensive for all the playersinvolved—from the homeowners weare serving to the brokers’ employersand the wholesalers who service thebrokers. In the long run, not deliver-ing this training will be deadly. Ishould point out that it is not only theloan officer who needs to become anexpert—so must the wholesaler whois serving this loan officer.

Is your company helping you with this worthy goal? Without this important componentyou will unfortunately be in the posi-tion of the blind leading the blind. If itleads your clients down the wrongpath, the end of the refinance boom isgoing to be very painful. Granted itwill be painful for all—but especiallyfor those who are not in the best posi-tion to deliver value. Wake up andthink about it because the clock isagain ticking …

Dave Hershman is a top author in themortgage industry with seven books pub-lished, as well as hundreds of articles.Dave has delivered hundreds of keynotespeeches, seminars and schools for theindustry as well. He may be reached bye-mail at [email protected] orvisit OriginationPro.com.

“In reality, those brokers who are

executing broad-basedrelationship businessmodels are the onesupon which everywholesaler should

focus their attention.”

Well, we are in the middle of anotherrefinance boom—unless rates wentup before this article is published.That means many loan officers arefeasting and it also means mostwholesale companies are delugedwith business. The focus is accommo-dating the business and not thefuture. They are adding reps andoperations staff as fast as they can,and many are inexperienced or werenot working for a company for a rea-son. However, this article is notabout the quality of the staff … it’sabout what happens when this par-ticular boom is over.

So, what happens when the refinanceboom ends?No one knows when it will end—but itwill end. Refinance booms always endat some point. If a particular mortgagewholesaler is focusing on deliveringrates and thus serving the lower end ofthe broker spectrum in terms of experi-ence and/or quality—the end of boomtimes is likely to hurt that much morefor those companies.

So what are the wholesalers doing about it?It appears to the neutral observerthat next to nothing is being done toposition the typical wholesaler tosucceed after the boom times. If alender is focusing upon rates, theyare likely to be attracting brokerswho are selling based upon ratesinstead of relationships. These bro-kers are also more likely to be thosewho are less experienced.

In reality, those brokers who are exe-cuting broad-based relationship busi-ness models are the ones upon whichevery wholesaler should focus theirattention. However, that strategyrequires a long-range business modeland I don’t quite see that happeningtoday. That requires the delivery ofwhat we call “added value” instead ofhawking rates, programs and service.Not that rates, programs and service

are not important, but to be a greatwholesale company and a leader—these factors must be a given instead ofthe entire focus. In other words, if youdon’t have the “basic three” down pat—don’t even bother trying to become aleader.

What represents added value?For one, wholesalers should be trying toimprove the careers of their targets. Ifthey provide training, it is typically ontheir products and procedures. This isakin to a loan officer speaking at theoffice of a real estate agent and talkingabout their great rates, programs anddoughnuts.

Wake up wholesalers.Support efforts to improve the careersof your targets. Not just to becomebetter salespeople, but to becomeexperts within the industry. It is theexperts who will survive. It is theexperts who will thrive after theboom. Loan officers cannot servicereal estate agents by solely promisingthe best rates, as opposed to havingextra value to help enhance agentbusiness through synergistic relation-ships. How are you helping the loanofficer, your clients, deliver thisvalue? Certainly not by buying themgolf or drinks. I cannot imagine howthese things will help your clientsbecome higher quality customers.

Training is one way to deliver valueto your customers—either by deliver-ing this training through your compa-ny or supporting industry-wideefforts. Unfortunately, there are notenough alternatives within this indus-try for broad-based financial trainingthat resides well above the basic level.Personally, I really thought trainingwould become more important in thisindustry when licensing became arequirement. However, licensing justcovers basics and compliance. It doesnot help a loan officer succeed. Morethan 50 percent of the loan officersaren’t even required to get thatbecause they work for banks. Banks

Wake Up Mortgage Wholesalers—Revisited

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Jumbo Lending in Today’s EnvironmentBy Brian Swanson

Historically, the “hard to finance” borrow-er was one with a risk-filled profile, usual-ly consisting of late payments, low or spo-radic income, and credit indicators thatsuggested an unwillingness or inability tomanage one’s debts. In the 1970s and1980s, these borrowers were led to privatemoney investors. Typically, these investorswere high net worth individuals buildingportfolios of first and second trust deedsarranged at very low loan-to-values (LTVs)with substantially higher interest rates. Thebrokers who arranged these loans werelater dubbed “hard money” lenders. Astime evolved and credit markets becameaware of the huge opportunity that existed

in this segment, the “hard money” lenderswere replaced with Wall Street firms creat-ing mortgage-backed securities (MBS) andthe business was renamed the far moreinnocuous “sub-prime” or “non-prime.”

In the current lending environment, aborrower who possesses a set of W-2s anda recent paystub more easily fits the crite-ria of agency or government guidelines,and therefore, is able to secure a loan ata higher LTV with little cash commitmentrequired. However, regardless of highcredit scores, lower LTVs and ample liq-uidity, the affluent self-employed borrow-er has a far more difficult time obtainingfinancing due to liquidity issues in the

secondary market for non-agency loans. There arenumerous reasons why thejumbo borrower faces agreater challenge asidefrom secondary market liq-uidity; they include issuesthat surround income andthe ability to document it,luxury properties with val-ues in a state of flux, occu-pancy, the number of prop-erties owned, acreage andso on.

While the players mayhave switched positions,unfortunately, the impactremains the same regard-less of which end of thespectrum it occurs; thehomeownership chain isimpaired. Whether it’s thebuyer who cannot obtainfinancing to buy a home, orthe seller who cannot obtain financing tomove up in purchase price, one withoutthe other will not assist in healing thehousing market. The entry level buyerpurchases the move up buyer’s homeusing FHA financing. The move up buyersecures a high balance conforming loanfrom any number of resources, while theluxury home buyer is faced with fewoptions. The result of this dynamic contin-ues to slow the growth of real estate mar-kets nationwide, coupled with the currentemployment and economic conditions.

Efforts to bring about a recovery thusfar have been centered on agency andgovernment loan programs. Both of whichcater to smaller conforming loan balancesand fall short of true jumbo loan amounts.Since rates in the conforming loan mar-kets remain at historic lows, mortgageoriginators, bankers and financial institu-tions keep a razor sharp focus on produc-tion with marketing efforts geared towardsrefinancing conforming balance borrow-ers into lower rate mortgages and govern-ment programs. Conforming loans work tokeep home prices at levels that allowfinancing to be more easily facilitated.Therefore, it makes greater economicsense for the home seller to lower theirasking price to keep it within reach of theconforming borrower, providing themaccess to a larger population of buyers.This inadvertently creates downward pres-sure on home values in this segment.

In addition to the complexities ofagency and government lending, theDodd-Frank Act outlined compensation

changes for originatorsthat have not been favor-able for jumbo mortgageinvestors. These changesmandate that investorspay a predetermined fixedamount to the brokersand conversely brokerstypically pay their loanofficers a fixed amountwhich may be expressedin a basis point percentageof the loan amount.Because the current focusremains on conformingbalance transactions, thecommission arrangementbetween the broker andloan officer is often agreater amount than thesuper jumbo lender offersin lender-paid compensa-tion. Since the take outinvestor population for

these super jumbo transactions is limitedand there is often only a single take outinvestor for a loan with unique attrib-utes, the mortgage banker’s warehouselender may not allow them to fund thisloan on their warehouse facility.

The product that exists for the jumboborrower today has a much more com-moditized feel. Regardless of the investorselected, guidelines all include similarfeatures. Most have loan amounts thattop out at $2 million, while requiring a30 percent downpayment for purchaseand income used must be very tradition-al in nature. Moving past the $2 millionloan amount, financing anything otherthan a primary residence, or a loanrequest that has any unique attribute willquickly eliminate the vast majority ofexits for this product. While financing forthis segment does exist, it can be moredifficult to locate and will likely not pos-sess terms that are reflective of the bor-rower’s strong credit scores, liquidity andoverall profile. Typically, these loans areconsummated by regional banks andcommunity financial institutions seekingto expand their balance sheet or by largeinvestment banks, to retain or attractdeposits from their clients.

Brian Swanson, CMB is senior vice presi-dent, chief lending officer of residentialand warehouse lending for BofI FederalBank. He may be reached by phone at(858) 764-9988, e-mail [email protected] or visit www.bofifederal-bank.com.

“Whether it’s thebuyer who cannot

obtain financing tobuy a home, or theseller who cannot

obtain financing tomove up in purchase

price, one without theother will not assist in

healing the housingmarket.”

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Company Name Website Specialty or Niche State(s) Licensed In

www.360mtg.com Conventional, FHA, VA, 30 states (see Web site for details)HARP 2.0 (Unlimited LTV/CLTV), expanded approval Level 1, 2, & 3

AFRWholesale.com FHA-accepting approved eligible Nationwide (except HI)findings as low as 600, 203K, and manufactured Housing. DU REFI PLUS with no max LTV and limited overlays.

www.bofifederalbank.com Jumbo/super jumbo, Nationwidewarehouse lending

www.CBConnex.com Agency paper, FHA Nationwide (except AZ, ID & NV)

coletaylormortgage.com Wholesale, retail, reimbursement, 32 states and growingwarehouse

ExpressLoan www.expressloan.com Private/hard money CA Only

www.fairwaywholesalelending.com/ Conventional, FHA, VA, USDA Nationwide Default.aspx (except for AL, AZ, AK, FL,

GA, HI, MA, NV & NY)

Generation Mortgage www.generationmortgage.com Reverse mortgages NationwideCompany (except for PR, VI, MO, KY & AK)

www.iconwholesale.com Conforming, FHA and VA Nationwide (except AK)

Maverick Funding Corporation www.maverickwholesale.com FHA, conventional, jumbos 28 states (see Web site for details)

www.msiloans.biz Conventional, FHA, VA, USDA Rural Nationwide (except for AK, HI & FL)Development, loss mitigation refinance

Norcom Mortgage www.norcompartners.com FHA, USDA, VA CT, MA, RI, VT, NH, ME, FL, AL & GA

Who’s Who in the 2012 Wholesale Marketplace?

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Company Name Website Specialty or Niche State(s) Licensed In

www.pbfinancialgrp.com California residential and commercial CAhard money, 8.50% to 12.00% on residential and commercial private money financing in California

www.pnlending.com FHA, VA, USDA, conventional, jumbo AR, CO, TX, LA, MN, NE, NM,and bond programs OK, WI & MT

www.remnwholesale.com Same day turn times since 2002 45 states

www.ridgewoodbank.com/home/ Jumbo loans, portfolio lender, Lower NY state and Fairfield borrowing/wholesale_lending condos & co-ops County, CT

www.sierrapacificmortgage.com Conforming, government, jumbos, Nationwidestate-specific programs (except for AK, MS & NY)

tpo.stonegatemtg.com Conventional, FHA (including 203K), 22 states (see Web site for details)VA & USDA

TMS Funding www.tmsfunding.com FHA, government loans & jumbos 27 states (see Web site for details)

www.townemortgage.com FHA & 203K AL, FL, GA, IA, IL, IN, KY,MI, MN, NC, ND, OH, SC, SD, TN

& WI

www.UWM.com Full service! Jumbo, conventional, NationwideFHA, VA, USDA & HARP 2.0 (except for AK, HI & NY)

www.usadirectfunding.com FHA, USDA, agency, jumbo, one-day OR, WA, CA & IDoff MLS & Mortgage Assurance Program

Washington Federal www.washingtonfederal.com 30-year fixed WA, OR, NM, TX, AZ, UT, NV & ID

www.wcslending.com Government Nationwide (except MO)

Who’s Who in the 2012 Wholesale Marketplace?

By Jonathan Foxx

She was already in herlate 90s, a renownedand beloved philan-thropist, bearing aname that symbolizeswealth and status.

Her son was already a senior citizen,when he schemed to rob her of herindependence, her wealth, her proper-ties, and her dignity. She was sufferingfrom Alzheimer’s disease, chronicanemia, and other ailments thataffect the elderly. Properties of greatvalue were sold without the mother’sknowledge, or with her dubious con-sent, and then no record was kept ofthe distribution of the proceeds.Roberta Brooke Astor died on August13, 2007, at the age of 105.

On Nov. 27, 2007, indictments oncriminal charges were announcedagainst Mrs. Astor’s son, Anthony D.Marshall, and attorney Francis X.Morrissey Jr.

The criminal charges were grandlarceny, criminal possession of stolenproperty, forgery, scheming todefraud, falsifying business records,offering a false instrument for filing,and conspiracy in plundering Mrs.Astor’s $198 million estate.

The trial of Marshall and Morrisseystarted March 30, 2009, and on Oct. 8,2009, the jury convicted Anthony D.Marshall of one of two charges ofgrand larceny, the most serious of anumber of charges brought against

him. The grand larceny conviction car-ries a mandatory prison sentence,meaning that Marshall could spendbetween one and 25 years in prison.Francis X. Morrissey Jr. was convictedof forgery.

All the money and status did notprotect Brooke Astor from the depre-dations of her son. If this happened toher, then, for most of the elderly, lack-ing the benefits of money and status,how may these seniors hope to protecttheir financial interests from similarscurrilous plundering, when they areold and infirm?

The Consumer Financial ProtectionBureau (CFPB) is involved in providingfinancial protection against elderabuse; indeed, it is specifically taskedwith that responsibility.

The CFPB‘s Office of OlderAmericans is charged by the Dodd-Frank Act with examining certifica-tions of financial advisors who serveelderly individuals and it plans tomake recommendations to Congresson how to protect older consumers.Recently, the CFPB issued anInformation Request regarding SeniorFinancial Exploitation.

In considering the challenges thatthe elderly must face in order to avoidfinancial abuse, I am providing an out-line of the CFPB’s recent InformationRequest. I am also offering a set ofquestions—revised from theInformation Request so as to be rele-vant to loan originators—the answersto which may provide new ways and

means to protect seniors from thesnares of financial predators.

Through proper review of proce-dures and a periodic self-assessment,companies should be able to train andsensitize its loan originators to therisks associated with senior financialexploitation.1

The information requestUsing statistics from a recent study,the CFPB noted that Americans aged60 and up lost at least $2.9 billion tofinancial exploitation in 2010 and thatthe total increased by 12 percentbetween 2008 and 2010. So, to beclear: in the study period, there was a12 percent increase in the amount ofmoney scammed from seniors! Also,women are more likely than men to bevictims, and financial exploitation ismost frequently perpetrated by familymembers and other persons in a posi-tion of trust.2

CFPB Director Richard Cordray gavea speech at the White House on June14, 2012, discussing the issuance ofthe Information Request regardingelder financial abuse.3 Dodd-Frankincludes provisions that are intendedto directly address the needs of seniorcitizens.4 Cordray said that misusingcredentials that certify a person as anadvisor for elderly clients is a form ofelder financial abuse, which instancehe cites as but one reason for theinformation request.

According to Mr. Cordray, based onthe study, for each case of elder finan-

cial abuse that is addressed, 42 actuallygo unreported. That is, only one report-ed case for every 42 unreported cases offinancial exploitation!

Hubert H. (“Skip”) Humphrey, who isthe Assistant Director of the Office forOlder Americans, has stated that theCFPB also plans to look specifically atthe needs of senior veterans.5 AndNaomi Karp, a Policy Analyst in theOffice of Older Americans, hasaddressed the difficulty that older peo-ple may experience in finding trustwor-thy advice when they need it, thoughthey may be suffering from age-relatedcognitive impairment.6

CategoriesIn the Information Request, the CFPB isseeking comments regarding certainareas that may affect senior financialexploitation:

� Evaluation of financial advisor certi-fications and designations.

� Providing financial advice and plan-ning information to seniors.

� Certification and designation infor-mation sources.

� Financial literacy efforts.� Financial exploitation of older

Americans, including veterans of theArmed Forces.

Self-assessment7

1) Certifications and designations1. What resources does the company

provide to seniors for determiningthe legitimacy, value, and authen-

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Network with wholesale lenders, technology vendors, title insurers and service providers.

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ticity of credentials held by its loanoriginators?

2. How effective are the company’sexisting resources at maintainingthe legitimacy, value, and authen-ticity of credentials held by its loanoriginators?

3. How effectively do existing accounta-bility controls deter the misuse ofloan originator credentials?Examples: Accountability controlsinclude revoking credentials, employ-ment, public notices of disapproval orother disciplinary actions.

2) Providing loan originator information4. What resources are available to

explain the subject matter expert-ise presented or implied by specificloan originator certifications anddesignations?

5. How effective are publicly availablemeans or the company’s ownresources at disseminating thor-ough, up-to-date information?

6. How effectively are seniors able touse available resources, public orinstitutional, to select a loan origi-nator with appropriate knowledgeto address their specific financialneeds?

3) Certification and designationinformation sources7. What sources of information are

available on the fraudulent or mis-leading uses of senior certificationsand designations?

4) Financial literacy 8. What financial education, counsel-

ing, or personal finance manage-ment programs are tailored by thecompany to the unique financialneeds of older Americans and theirfamilies or caregivers?

9. Among these educational pro-grams, what are the Best Practicesin providing to seniors financial lit-eracy and robust, practical infor-mation on personal finance man-agement?

5) Financial exploitation of olderAmericans10. What types of education and train-

ing are provided to loan originatorsto inform them of fraudulent,unfair, abusive or deceptive prac-tices targeting Americans age 62and over?

6) Financial exploitation of olderveterans of the Armed Forces11. What types of education and train-

ing are provided to loan originatorsto inform them of fraudulent ordeceptive practices targeting olderveterans and/or military retirees?

12. How does the company monitoritself regarding consumer protec-tion measures relating to consumerfinancial products and servicesoffered to, or used by, service mem-bers and their families?

The CFPB’s Information Requestcomes as part of the World Elder Abuse

Awareness Day8 activities held in June.Because there are a growing number ofcomplaints to the CFPB regarding elderfinancial abuse, the CFPB will use theinformation it obtains to determine thevarious ways to prevent financial abuseof the elderly. By conducting a self-assessment similar to the one I haveoutlined, loan originators woulddemonstrate a culture of integrity andhelp to bring about appropriate, finan-cial safeguards for senior citizens.

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 management

firm devoted to providing regulatorycompliance advice and counsel to themortgage industry. He may be contactedat (516) 442-3456 or by e-mail [email protected].

Footnotes1—Request for Information Regarding SeniorFinancial Exploitation, Request for Information,Consumer Financial Protection Bureau, Dated:April 27, 2012, Announced June 14, 2012.2—Consumer Financial Protection Bureaulaunches inquiry on elder financial abuse, PressRelease, Consumer Financial Protection Bureau,June 14, 2012.3—Cordray, Richard, Remarks by Richard Cordrayat World Elder Abuse Awareness Day Event,Consumer Financial Protection Bureau Speeches,June 14, 2012.4—Section 1013(g)(1) of the Dodd-Frank WallStreet Reform and Consumer Protection Act of

2010 requires the Bureau of Consumer FinancialProtection to facilitate the financial literacy of indi-viduals aged 62 or older, on protection from unfair,deceptive, and abusive practices and on currentand future financial choices, including through dis-semination of materials on such topics.5—Humphrey, Hubert H., Protecting OlderAmericans from Financial Abuse, PublicStatement in CFPB Blog, CFPB June 14, 2012.6—Karp, Naomi, New Federal Efforts to CombatElder Financial Exploitation, Webinar, ConsumerFinancial Protection Bureau, June 6, 2012.7—Op. cit. 1: My outline for conducting a self-assessment is drawn from certain features con-tained in the Request for Information, amendedappropriately to apply to the unique needs of res-idential mortgage loan originators.8—World Elder Abuse Awareness Day (WEAAD)was launched on June 15, 2006 by theInternational Network for the Prevention of ElderAbuse and the World Health Organization at theUnited Nations.

By Douglas Arnett

Sounds deceptive,doesn’t it? But it con-veys a basic sales con-cept: The person ask-ing the question con-trols the conversa-

tion. For example, how many timeshave customers asked you a series ofquestions and then hung up to contin-ue “dialing for dollars?” They got theinformation they wanted while you gotnothing.

Perhaps, you are telling a real estateagent the benefits of your outstandingfirm. You are smack-dab in the middleof your presentation when the agentasks, “Can you do an FHA 203k?” Manyloan originators simply answer “yes”and continue with their pitch.

Basic sales disciplineAs you know, we are moving into ahousing recovery, and rates are hover-ing at record lows. In this economic cli-mate, you can easily forget basic salesprinciples in the midst of the chaos. Butyou can practice a standard sales disci-pline every day. When customers askyou a question, respond by asking themto clarify or to understand why.

You can visualize this principle withthe following adages:

� Someone throws a porcupine in yourlap, what do you do? Throw it back,of course!

� You have two ears and one mouth,listen twice as much as you speak.

Open-ended questionsSo let’s go back to the customer “dialingfor dollars” who asks, “What is your best30-year fixed rate?” Many originatorsquote the lowest rate possible to under-cut the competition. Instead, you shouldregain control of the conversation byresponding, “Well, let me ask you, whatrates have you been quoted?”

You want to get the customer talk-

ing by asking an open-ended questionbeginning with who, what, when,where, why or how. By getting cus-tomers to talk, you find out what theyknow and what drives their buyingdecisions.

Close-ended questionsSubsequently, you can hone in on yourbenefits by asking a series of close-ended questions to focus on specificways you can beat the competition.

So, let’s say the customer replies,“One of your competitors quoted methree percent and no points.” Now, youmight ask, “What fees did they quoteyou? Did they volunteer their overallturnaround time to process your trans-action? Did you ask about the experi-ence level of their originators? Did theyprovide references of their service?”

Thus, you move from general open-ended questions to specific ones inorder to highlight your strengths andsteer away from a sole comparison ofrate versus rate.

Getting the saleBack to the real estate agent who asksyou, “Can you do an FHA 203k loan?”Respond with easy open-ended ques-tions such as: “Why do you ask?” “Are youworking with a customer who needs a203k loan on a specific property?” If theysay “yes,” you can ask for the details. Youhave taken back control and are focusedon a specific transaction.

Therefore, treat every question froma client as an opportunity to gain moreinformation and increase your odds ofgetting the sale.

Douglas Arnett is regional sales directorfor Guaranteed Home MortgageCompany, a licensed mortgage invest-ment and banking firm comprised ofmore than 300 mortgage professionalslending in 28 states. He may be reachedby phone at (914) 696-3400 or [email protected].

don’t answer your

“By getting customers to talk, you find out what they know and what drives their buying decisions.”

customer’sQuestions!

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

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

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

• Mortgage Branch Employment Opportunities

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

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

• Hiring Licensed Mortgage Originators for branch managementand loan origination.

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

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

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

The Mortgage Industry’s Matchmakerhttp://mortgagebrokersnetwork

Branch Recruitment

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

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

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

Bookmark this!Access these listings

online atnmpmag.com/directory_list

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Document Preparation

Document Preparation (SaaS)

Mortgage Loan Closing Document Preparation & Compliance ServicesFulfillment Services Including Pre-Funding Review & Post-ClosingInterfaces with Leading Loan Origination Software SystemsForeclosure – Loss Mitigation Services

Robertson | Anschutz800-343-7160

[email protected]/info.html

Mortgage Loan Closing Document Preparation & Compliance SoftwareLoan Documents and Compliance – Web-based/SaaS – Easy to UseIntuitive – Secure and Reliable – Integrates with Leading LOSFree Setup and Support – Extensive Compliance Audits

Docs on Demand800-343-7160

[email protected]

Best Rate Referrals ............................................800-811-1402Mortgage marketing company with decades of combined expe-rience providing quality leads, mailers, lists and dialer products. www.bestratereferrals.com & www.mortgageleads.org

FHA Audit and Licensing

TagQuest is a full service marketing firm created specifically forthe ever changing mortgage business. We have tested and provencampaigns for FHA -VA - HARP - CONVENTIONAL loan types.TagQuest knows what it takes to generate quality leads whetherthrough direct mail marketing, telemarketing, internet leads, datalists, tracking systems, or any combination thereof. TagQuest willbrand your company, prepare targeted marketing campaigns thatgenerate interest in your company, and most importantly, showyou how to turn sales leads into repeat customers.

TagQuestwww.myharpleads.com

TagQuest.com888-717-8980

Employment Services Loan Origination Systems

Calyx Software, the #1 provider of mortgage solutions is dedicatedto offering reliable and affordable software that streamlines, inte-grates and optimizes the loan process. Find out how PointCentralcan streamline your business and create compliant processes today.

Calyx Software 800-362-2599

[email protected] www.calyxsoftware.com

Reach affluent and creditworthy consumers who are in-market andready to transact. Bankrate is a consumer direct Web site, NOT alead aggregator. Qualified leads for every sized budget, and payonly for performance. No set up fees! No contracts! No risk!

Founded in 2005, Best Rate Referrals has grown into one of thefastest growing marketing firms in the nation. By combining newtechnology with traditional direct marketing methods that produceprofitable results.

Best Rate Referrals is the direct marketing leader in the mortgageand banking industry.

• Mortgage Direct Mail & List Services• Mortgage Live Transfers• Mortgage Internet Leads• Mobile Marketing

Best Rate ReferralsThe Leading Direct Marketing Company

for Mortgage Professionals800-811-1402 • www.bestratereferrals.com

Leads

Sign-on weekly at nmpmag.com/lykkenonlending

The Lykken on LendingR A D I O P R O G R A M

Credit Reporting

Credit reports • Rapid rescore • Reissue • SupplementsIRS & Social verification • VOE / VOI • Title • Flood

Appraisals / BPO / AVM • Fraud alerts • Red Flag • LQIMOST AGGRESSIVE PRICING!

“A Full Service Lending Information Company”A/E: Jeremy “Judge” Honor

877-MFI- [email protected]

www.MfiCreditSolutions.com

Continuing Education

Jeff Mifsud, a former FHA Direct Endorsed Underwriter trained byHUD and an FHA Originator for over 15 years, is publisher of TheFHA Originator, a monthly marketing newsletter which gives you…

• FHA guideline news to keep you updated• FHA Marketing tips and downloads that are easily customized• Personal development tips to help you develop your character• Full access to all previous FHA marketing downloads!

No contracts so sign up today and give yourself the tools to brandyourself as The FHA Expert in your marketplace.

Cost: Only $19.95 per month per physical office location.

Watch for our 8 Hour NMLS Continuing Education Course

Mortgage SeminarsMortgageSeminars.com

248-403-8181

First National Compliance Solutions Inc.1-800-400-4134

www.firstnationalcompliance.comBonnie Nachamie & Jonathan Pinard have assembled a team ofexperts to assist Mortgage Brokers, Mortgage Bankers, Federaland State Chartered Banks & Credit Unions with their mortgagecompliance needs.

TagQuest ................................................................888-817-8980CUSTOMIZE YOUR CAMPAIGNS! FHA - HARP - VA Leads,Loan Modification, Debt Consolidation, Direct Mail, Data List,Live Transfers, Internet Leads – tagquest.com

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Wholesale/FHA

Icon Residential, a wholly owned subsidiary of Grand Bank N.A.,is one of the nation’s leading Conforming, FHA and VAwholesale lenders. Our strength, success and longevity isderived from delivering customers service that exceeds ourvalued business partners expectations. With deep industryknowledge, financial stability and innovative technology weprovide the solutions for our business partners to fund loanswhile avoiding risk.

• Direct Access to Underwriters• Competitive Pricing• Innovative Technology• Paperless Solution• Bank Funding

Icon Residential Lenders(888) 247-4207

www.iconwholesale.com

Wholesale/Residential

AMX/Land Home Financial ..................800-349-4172 AMX/Land Home Financial Services Wholesale LendingDivision - Great Rates, Great Programs, Great Service.Offering financing options that work in today's market.

Wholesale Lenders

REMN has FHA, USDA, 203k, VA and Conventional solutions to fitthe needs of your customers. But, at REMN, our most valuableproduct is our people. The REMN Sales and Operations Teamsgive you - and your loans - the time and attention that youdeserve. Even better, at REMN, same-day approvals are guaran-teed.* You can rely on us to get the little, yet vital, things takencare of on time.

Interested in joining our Wholesale Division? Send your resume to

[email protected]

Real Estate Mortgage Network, Inc.www.remnwholesale.com

866-933-6342

#1 USDA RD lender in multiple states with strong FHA/VA/CONVproduct lines as well. Don't be held hostage by a captive brancharrangement. Bank it or broker it. Have a business name/identityyou don't want to give up? We allow DBAs (subject to state rules).

Polaris Home Funding Corp.616-667-9000

[email protected]/timeforachange

Retail Branch

Veros Real Estate Solutions is a premier technology leader in the mort-gage industry and proven leader in enterprise risk management andcollateral valuation services. Veros combines the power of predictivetechnology and data analytics for advanced automated solutions.

Veros Real Estate Solutions2333 North Broadway, Suite 350 • Santa Ana, CA 92706

(866) 458-3767www.veros.com • @verosres (Twitter)

If your ad was here, you would be seen by

191,181 MortgageProfessionals looking

for resources to help them

in their business.

The Resource Registry is a directory of lenders(wholesaler or retail thatare recruiting), affiliatedservices and resources

that is seen by more than 191,181 active

Professionals.

Call 516-409-5555, ext. 4to register your company.

Recruitment

CBC National Bank is one of the nation’s fastest growingwholesale lenders offering Conventional, FHA, VA, and USDA.The most important aspect of being a leader in today’s market isthe ability to build and maintain a meaningful relationship witheach customer. We understand that these meaningful relation-ships coupled with competitive pricing and efficient technologyare the pillars of today’s lending environment.

We are now hiring Account Executives in AL, TN, KY, VA, & MD.

Contact Stu Ehrlich in our HR department at

[email protected] for further details.

Big Enough to MATTER…Small Enough to CARE

CBC National Bank3010 Royal Boulevard South, Ste. 230

Alpharetta, GA 30022888-486-4304

SEPTEMBER 2012Monday-Wednesday,

September 10-122012 American Mortgage Conference

Raleigh Marriott Crabtree Valley4500 Marriott Drive

Raleigh, N.C.For more information,

call (919) 781-7979 or visit NCBankers.org.

Wednesday-Friday, September 19-21

2012 New England Mortgage Bankers Conference

Hyatt Regency Newport1 Goat IslandNewport, R.I.

For more information, call (617) 570-9114

or visit MassMBA.com.

Sunday-Tuesday, September 23-25

2012 Asian Real Estate Association ofAmerica (AREAA) National Convention

Bellagio Resort3600 South Las Vegas Boulevard

Las Vegas, Nev.For more information,

call (760) 918-9162 or visit www.areaa.org.

Sunday-Tuesday, September 30-October 2

Mortgage Bankers Association (MBA)2012 Regulatory Compliance Conference

Grand Hyatt Washington1000 H Street Northwest

Washington, D.C.For more information,

call (800) 793-6222 or visit MortgageBankers.org.

OCTOBER 2012Friday-Saturday, October 5-6Arizona Association of MortgageProfessionals 2012 Lenders Fair

& Education EventPhoenix Convention Center

100 North Third StreetPhoenix, Ariz.

For more information, call (623) 972-6180 or visit AZAMP.org.

Tuesday-Thursday, October 9-112012 Northeast Conference

of Mortgage BrokersTrump Taj Mahal Casino Resort

1000 Boardwalk AvenueAtlantic City, N.J.

For more information, call (732) 596-1619 or visit NJAMB.org.

Monday-Wednesday, October 15-17

2012 National Reverse MortgageLenders Association (NRMLA) Annual

Meeting & ExpoHyatt Regency Riverwalk

123 Losoya • San Antonio, TexasFor more information,

call (202) 939-1760 or visit NRMLAonline.org.

Sunday-Wednesday, October 21-24Mortgage Bankers Association 99th

Annual Convention & ExpoThe Hyatt Regency

151 East Wacker Drive • ChicagoFor more information,


NOVEMBER 2012Thursday, November 1

Utah Association of MortgageProfessionals 2012 Annual Expo

Location to be determinedFor more information,

call (801) 597-2122 or visit UAMB.org.

Wednesday-Friday, November 7-9Mortgage Bankers Association

(MBA) 2012 Independent MortgageBankers Conference

The Fairmont Dallas1717 North Akard Street

Dallas, TexasFor more information,

call (800) 793-6222 or visitMortgageBankers.org.

Wednesday-Friday, November 14-16Mortgage Bankers Association (MBA)

2013 Accounting & FinancialManagement Conference

The Westin Gaslamp Quarter910 Broadway Circle

San Diego, Calif.For more information,


To submit your entry for inclusion in the National Mortgage Professional

Calendar of Events, please e-mail the details of your event, along with

contact information, to [email protected].

DECEMBER 2012Friday-Monday, December 7-10

NAMB NATIONAL 2012MGM Grand

799 South Las Vegas BoulevardLas Vegas, Nev.

For more information, call (972) 758-1151 or visit NAMB.org.

FEBRUARY 2013Sunday-Wednesday, February 3-6

2013 CREF/Multifamily HousingConvention & Expo

Manchester Grand Hyatt San Diego1 Market Place • San Diego, Calif.


or visit MortgageBankers.org.

Tuesday-Friday, February 19-22Mortgage Bankers Association (MBA)2013 National Mortgage Servicing

Conference & ExpoGaylord Texan Hotel & Convention Center1501 Gaylord TrailGrapevine, Texas



MARCH 2013Wednesday-Sunday, March 6-10

Mortgage Bankers Association (MBA) 2013 Mid-Winter Housing

Finance ConferenceThe Ritz-Carlton Bachelor Gulch

130 Daybreak RidgeAvon, Colo.



Wednesday, March 132013 Maryland Association of Mortgage

Professionals Annual ConferenceMaritime Institute

692 Maritime BoulevardLinthicum Heights, Md.For more information,

call (410) 752-6262 or visit www.mdmtgpros.org.

APRIL 2013Sunday-Wednesday, April 14-17

2013 National Technology in MortgageBanking Conference & Expo

Westin Diplomat3555 South Ocean Drive

Hollywood, Fla.For more information,


Sunday-Wednesday, April 14-17Mortgage Bankers Association (MBA)

2013 National Fraud Issues ConferenceWestin Diplomat

3555 South Ocean DriveHollywood, Fla.



MAY 2013Sunday-Wednesday, May 5-8

Mortgage Bankers Association (MBA)2013 National Secondary Market

Conference & ExpoNew York Marriott Marquis

1535 BroadwayNew York, N.Y.



Sunday-Wednesday, May 19-22Mortgage Bankers Association

(MBA) 2013 Commercial/MultifamilyServicing & Technology Conference

Arizona Biltmore2400 East Missouri Avenue

Phoenix, Ariz.For more information,


Sunday-Wednesday, May 19-22Mortgage Bankers Association

(MBA) 2013 Legal Issues/RegulatoryCompliance Conference

Boca Raton Hotel501 East Camino Real

Boca Raton, Fla.For more information,


NATIONAL MORTGAGE PROFESSIONAL

calendarOF EVENTS

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Documents

mortgage loans

vice president

mortgage delinquency

basis points

darlington amba president

percentage of loans

q2the delinquency rate

process of foreclosure