save the date...wynn las vegas flip the cover and save 49%! 001_nmn1018 1 9/28/18 2:36 pm...

SAVE THE DATESeptember 23-24, 2019

WYNN LAS VEGASFlip the cover and save 49%!

001_NMN1018 1 9/28/18 2:36 PM

003_NMN1018 3 9/28/18 2:43 PM

004_NMN1018 4 9/28/18 4:04 PM

SAVE THE DATESeptember 23-24, 2019

WYNN LAS VEGASFlip the cover and save 49%!

002_NMN1018 2 9/28/18 2:36 PM

THElender’sadvocateAs the industry confronts tight margins, shifting market share and regulatory uncertainty, a new leader emerges at the MBA

CV1_NMN0818.indd 1 10/1/18 1:08 PM

Gain Insight Into The Future Of Lending

National Mortgage News Standard Subscription**: National Mortgage News, the leading resource in the mortgage industry, provides insight and foresight on a full range of issues and developments including origination, secondary market, servicing, technology and regulatory compliance.

Now: $320Regular Price: $356**This introductory special offer is valid only for new subscribers through November 16, 2018.

Digital Mortgage 2019 Ticket Price*:Digital Mortgage 2019, one of the premier events in the mortgage industry, brings over 2,000 attendees to Las Vegas next September and showcases the most innovative digital solutions and offers countless opportunities to meet decision makers across the mortgage ecosystem.

Now: $995Regular Price: $1,995*This offer is valid until November 16, 2018

Stop by the National Mortgage News booth #212 to learn moreContact: Sejiro Agosa, National Account Manager at 212-803-8388 or [email protected]

www.nationalmortgagenews.com

Visit www.sourcemedia.com/mba18 to sign up.

***Discount off full subscription price and conference pass cost

Bundle National Mortgage News and Digital Mortgage 2019 for $1,199 (49% Savings)***

d38504_MBA_NMN 2018_AdR4.indd 1 10/1/18 3:05 PM002_NMN1018 2 10/1/2018 3:24:05 PM

October 14, 2018 National Mortgage News 1nationalmortgagenews.com

JASO

N S

EILE

R

October 14, 2018 | VOL. 43 | NO. 3Contents

20The Lender’s AdvocateAs the industry confronts tight margins, shifting market share and regulatory uncertainty, a new leader emerges at the MBA

Outlook4Leading MI company innovates through the recoverySponsor content from Arch | MI

8How data analytics can lower customer acquisition costsSponsor content from Informative Research

Origination10Appraisers balk at plan to ‘virtually eliminate’ SBA property valuations

Secondary12Why it will be hard to find new CEOs for Fannie and Freddie

Servicing14How AI virtual assistants (like Alexa) could reshape mortgages

Technology16Quicken Loans’ prescription for mortgage lenders

Compliance & Regulation18Warren wades into CRA overhaul with revamp plan of her own

In Every Issue2Editor’s Desk

26Voices

30People

32Screenshots

Departments

001_NMN011018 1 10/1/2018 2:48:04 PM

2 National Mortgage News October 14, 2018

This month’s issue fea-tures an exclusive inter-view with Robert Broek-smit, the new president and CEO of the Mortgage Bankers Association.

Broeksmit, who goes by Bob, sat down with Nation-

al Mortgage News for his first media interview since taking over from David Stevens in August. There were so many anecdotes from his life story that we couldn’t fit them all in the piece. Here’s just a sampling of what didn’t make it:

Bob’s grandfather, John Shaw Broeksmit, was a banker, first at Merchants National Bank of Cedar Rapids, Iowa (which would lat-er go on to become a part of U.S. Bank), and then Harris Trust & Savings Bank of Chicago, now known as BMO Harris Bank.

His hometown of Dwight, Ill., is home to one of three banks designed by Frank Lloyd Wright. The building, which opened in 1906, originally housed the real estate office and bank that was owned by businessman, and later U.S. congressman, Frank L. Smith.

Bob purchased his first home at the tender age of 24, a townhouse in Maryland that he bought with a co-worker in 1989.

Speaking to numerous colleagues, friends and MBA power brokers made this an interesting sto-ry to report and I hope you enjoy reading it. And of course, we wish Dave a happy retirement.

We’re pleased to work with Chicago-based artist Jason Seiler for this month’s cover art. Jason is a traditional painter at heart, but spe-cializes in a style of digital illustrations by hand drawing and painting his subjects on an LCD screen, rather than relying on photo manipula-tion. You may recognize his work from the 2013 Time “Person of the Year” issue, where his paint-ing of Pope Francis appeared on the cover. You can see more of his work at jasonseiler.com.

I’d also like to thank everyone who came to Las Vegas to attend NMN’s third annual Dig-ital Mortgage Conference. The turnout was amazing and we saw some incredible new in-novations and developments from across the industry. If you missed the conference, or want to relive all the excitement, recaps and video replays from much of the event are available at nationalmortgagenews.com

Lastly, if you’re reading this while attending the MBA’s Annual Convention in Washington, D.C., I hope you’ll stop by the NMN booth in the exhibit hall to say hello and pick up some fun trinkets. We love meeting readers and hearing about what you’re seeing in the industry.

Editor’s Desk

Regime Change

Send your comments, questions and story ideas to Editor in Chief Austin Kilgore: [email protected]

Winner of the Polk Award for Financial Reporting

Winner of an ASBPE Editorial Excellence Award

Winner of a NAJA Editorial Award

One State Street Plaza, 27th Floor New York, NY 10004 (212) 803-8200 Fax: (212) 843-9600

Editor in Chief: Austin Kilgore

Capital Markets Editor: Bonnie Sinnock

Originations Editor: Bradley Finkelstein

Reporters: Kate Berry, Paul Centopani, Hannah Lang, Elina Tarkazikis

Copy Editor: Glenn McCullom

Senior Art Director: Nick Perkins

VP, Research: Dana Jackson

Group Editorial Director, Banking: Richard Melville

Executive Director, Content Operations and Creative Services: Michael Chu

SVP, Head of Media Sales: Dennis Strong

Publisher: Kimberlee Baker (212-803-8475)

Sales Manager, Northeast Region: Brad Bava (212-803-8829)

New Business Development: Vernesa Merdanovic (212-803-8393)

Senior Marketing Manager: Deborah Vanderlinder (212-803-8323)

Customer Service: [email protected]; (212) 803-8500

Reprints: For more information about reprints and licensing content from National Mortgage News, please visit www.SourceMediaReprints.com or contact PARS International Corp. (212) 221-9595.

Reproduction Policy: No part of this publication may be reproduced or transmitted in any form without the publisher’s written permission.

Transactional Reporting Service: Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by SourceMedia, provided that the appropriate fee is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, U.S.A.

Chief Executive Officer: Gemma Postlethwaite

Chief Financial Officer: Sean Kron

EVP & Chief Content Officer: David Longobardi

Chief Subscription Officer: Allison Adams

SVP, Conferences & Events: John DelMauro

SVP, Human Resources: Ying Wong

National Mor tgage Ne ws (IS SN #1 050-3331) is published monthly e xcept in D ecember and with an e xtra is sue in October by SourceMedia, Inc., One State Street Plaza, 27th Floor New York, NY 10004, 212-803-8200. Subscription price: $349 per year in the U.S.; $389 for all other countries. Change of Address: Notice should include both old and new address, including ZIP c ode. PO STMASTER: Ple ase s end all addr ess changes to National Mortgage News/One State Street Plaza, 27th Floor New York, NY 10004. For subscriptions, renewals, address chang es and deliv ery s ervice is sues c ontact our Customer Service department at (212) 803-8500 or email: [email protected]. P eriodicals po stage p aid at Ne w York, NY and additional U.S. mailing offices. © 2018 National Mortgage News and SourceMedia Inc. All rights reserved.

002_NMN011018 2 10/1/2018 2:48:07 PM

sourcemedia-fullpage.indd 1 9/20/2018 9:06:01 AM003_NMN1018 3 10/1/2018 1:57:33 PM

Leading MI Company Innovates Through the Recovery

Although the recovery has been uneven, we are now beginning to see some of the industry’s leading companies return to top health. Few sectors of the industry have recovered as well as the private mortgage insurance business. To find out why, and to learn what executives working at this company expect for the future, we spoke to one of the leaders in this space. What follows is an excerpt of a discussion we had with Carl Tyree, Executive Vice President and Chief Sales Officer at Arch Mortgage Insurance Company.

Q: What is contributing to the success of your industry right now?A: Large investors in the secondary market have made high loan-to-value lending, and specifically 95%+ LTV loan products, more attractive to borrowers. Conventional products are often better choices for homebuyers than FHA-in-sured mortgages. Private mortgage insurance plays an important role in making these products available.

Q: What sets Arch MI apart today?A: Now that we have successfully completed our integration with United Guaranty Corporation, we hold a dominant position in helping lenders manage mortgage credit risk. We control a sizable book of insurance in force, and when you couple that with our data analytics, we operate the most robust risk-based pricing model in the industry – RateStarSM – a model that resonates well with the lending community.

In addition, we consistently demonstrate innovation and have throughout our history. The creation of Arch Mortgage Guaranty Company, our entity for portfolio lenders, is a great example. Our competitive pricing tool, Arch

MI RateStar®, the leading risk-based pricing model in the industry, is another good example of that innovation.

Q: What is Arch MI doing to help lenders increase volumes in today’s market?A: We recognize that this is a tough time for our clients. Margins are com-pressed, volumes are down and refi-nance transactions are less frequent, so we’ve introduced two unique solutions to the marketplace.

The first is the AMGC Community Program. Available through Arch Mortgage Guaranty Company, which enables lenders to originate port-folio loans, this program’s flexible underwriting guidelines allow lenders to qualify our country’s firefighters, teachers and police for mortgages in the communities they serve.

The second, and the one I’m most excited about, is called Ratestar BuydownSM. An enhancement of our existing RateStar pricing solution, this feature allows lenders to use seller concessions or lender credits to lower the cost of the monthly mortgage insurance premium. It’s a solution that

gives our clients a lot of flexibility to structure payments to the benefit of the borrower.

Q: Where do you see opportunity in today’s market, both for your firm and for lenders?A: I think there’s still a lot of opportuni-ty for mortgage insurers to play a larger role in the private portfolio market. Our portfolio products haven’t been utilized post-financial crisis to their full benefit. I think the MI industry now has some really good, solid counterparties that participate in this space. So I see portfolio lending being incremental production both for our clients and for the MI industry.

Q: On the risk side, what are the biggest risks that you see in today’s market?A: I think that as we see home price appreciation continue on this steady pace upward, certain markets are starting to show signs of getting to the top side of their valuation. I think the entire mortgage industry needs to pay close attention to those valuations.Arch MI releases a quarterly report called The Housing and Mortgage Mar-ket Review®, or HaMMRSM. It provides

valuation insight (powered by the global chief economist of our parent company, Ralph DeFranco), presented as user-friendly data in an easy-to-read report. This allows us to show our clients the key data for the top 100 MSAs that they need to monitor their exposure in markets that are important to them.

Q: What critical strength does Arch MI bring to the industry?A: Arch MI is best-in-class when it comes to managing risks across many different insurance lines. We are a well-diversified insurance company, which is critical for the up and down cycles we have historically seen in housing. We built the model that supports our “accumulate and distrib-ute mortgage credit risk” approach, which I believe is necessary to manage through different credit cycles.

At the end of the day, the ability to pay claims in a timely manner, especially during stressed economic times, is the most meaningful value proposition of any MI company.

© 2017 Arch Mortgage Insurance Company. All Rights Reserved. Arch MI is a marketing term for Arch Mortgage Insurance Company, United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. Coverage is available through admitted company only. Arch MI RateStar and ArchMIConnect are registered marks of Arch Capital Group (U.S.), Inc. or its affiliates. DU is a registered mark of Fannie Mae.

Carl TyreeExecutive Vice President and Chief Sales Officer Arch MI

Go to archmi.comto get started today.

SPONSOR CONTENT FROMARCH MI

Outlook

004_NMN1018 4 9/28/18 5:17 PM004_NMN1018 4 10/1/2018 1:57:33 PM

We’re Driving Innovation Home.

Join us on the journey to a true digital mortgage.

At Ellie Mae, we’ve always been guided by innovation. And that’s why we’re the

only LOS provider with a true digital mortgage solution that covers the entire loan

lifecycle, from beginning to end. Encompass® can help you to originate more loans,

lower costs, reduce time to close, and ensure the highest levels of compliance,

quality and efficiency.

Find out how Ellie Mae is driving innovation that gets people into homes

faster at ellie.me/DIH4.

005_NMN1018 5 10/1/2018 1:57:33 PM


Purchase Refinance

1Q18

2Q18

3Q18

4Q18

$0 $50B $100B $150B $200B $250B $300B $350B $400B $450B

Anticipated slowdownThe expected downturn of the economy drove a reduced projection for mortgage originations in 2018

Source: Fannie Mae

Mortgage Volume Estimate Cut, Although New-Home Sales Grow: Fannie MaeWhile new-home construction and sales should rise in the next 18 months, next year’s mortgage origination volume estimate was cut slightly as the economy is expected to slow down soon.

Fintech Eyes Opportunity in $15 Billion Title Insurance BusinessSusanInFlorida: “Do they cover fraud? MERS dealings are not usually recorded in courthouses. So you have title insurance, try to sell later, discover shenanigans in recording.”

Oct. 28-30NRMLA 2018 Annual Meeting & ExpoSan Diego, CAbit.ly/2KgzK3L

Nov. 14-15iGlobal Real Estate Private Equity SummitLos Angeles, CAbit.ly/2Du89tB

Nov. 28-30Small Biz: Banking ConferenceNashville, TNbit.ly/2xAvSD2

People are reading... People are talking about... Events

What’s going on atnationalmortgagenews.com

https://www.nationalmortgagenews.com

006_NMN011018 6 10/1/2018 2:48:16 PM

/

CORRESPONDENT · WHOLESALE · WAREHOUSE · SUBSERVICING

Award-winning lending solutions

crafted just for you.We understand that details and timing matter the most. For the past 30 years, our award-winning team has surpassed the highest standard in

quality, consistency, and customer service, all backed by Flagstar Bank, one of the nation’s leading mortgage providers.

#1 National FHA Wholesaler1

Top 10 TPO2

3x Fannie Mae Star Performer Servicing Award

Visit f lagstar.com/why to learn more.

1FHA Neighborhood Watch, Q4 20172Inside Mortgage Finance, Q4 2017Some restrictions may apply. All borrowers are subject to credit approval. Programs subject to change. The information provided herein is for dissemination to and for real estate and � nancial business entities only, and is not an advertisement for the extension of credit to customers.

007_NMN1018 7 10/1/2018 1:57:34 PM

How Data Analytics can Lower CustomerAcquisition Costs

For mortgage lenders, one of the most pressing challenges is customer acquisition — finding the most qualified and profitable applicants yet doing so efficiently and cost-effectively. The stakes are high considering loan production and upfront costs are rising for the entire mortgage industry. According to the Mortgage Bankers Association (MBA), profits are down almost 50% from $1,346 per loan in 2016 to only $711 per loan originated in 2017.1

However, controlling expenses is not the only challenge for mortgage lenders. They need to rein in costs while delivering an exceptional customer experience across all channels, be it online, mobile, call center or even face-to-face. Customers have little tolerance for a fragmented or lengthy application process, forcing mortgage lenders to go beyond the traditionally unwieldly and frustrating pre-approval and approval process to deliver a customer experience that truly differentiates it from other lenders.

In fact, two-thirds of customers will even pay a premium to companies that offer superior experiences. For mortgage lenders, improving the customer experience can result not only with competitive differentiation in a highly competitive market but increased revenues as well.2

A data-driven, strategic approach to customer acquisition allows mortgage lenders to reduce costs while improving the customer experience. Patrick Buckner, President of Data Solutions at Informative Research, addresses how mortgage lenders can meet the dual challenges of lowering high customer acquisition costs yet delight customers with exceptional service.

Q: What are some of the biggest challenges mortgage lenders face in today’s market? A: This new mortgage-lending environment is changing how lenders must approach customer acquisition. Costs for customer acquisition keep rising, partly due to increased regulations that are putting pressure on lenders and also due to the cost of generating customer leads. There’s been a distinct move from relying on referrals for new customers to an increased emphasis on purchasing lead generation lists. This combination of regulatory burdens and more expensive lead generation is making it more difficult for mortgage lenders to generate revenue and retain profitability levels.

Q: Can you talk about borrower expectations and how those have evolved? A: Consumers increasingly expect an automated shopping experience regardless of how complex the transaction is. Mortgage lending is of course a highly-regulatory, multifaceted process involving a number of moving parts—everything from pulling credit reports to verifying income to staying compliant. In the past, customers were more forgiving of a mortgage origination process that required lots of back and forth and filling out forms.

Today, consumers expect that lenders will provide a transparent, streamlined origination process from a lender that is not only an expert at delivering the right loan at the right price, but does so with as little friction as possible. They expect real-time, or near real-time, prequalification status and updates.

Q: How can lenders improve customer acquisition? Is there an acquisition method that is most effective or profitable for lenders?A: There’s not any one acquisition method that is best for all lenders—it depends upon your overall business strategy. But every mortgage lender can benefit from a data-driven approach. By this, I mean combining data from multiple sources including credit bureaus, public records, property data and demographic data to determine which customers will be the most likely to apply for, and qualify for, a loan. Lenders can then use this data to enhance their strategy. The result is a more predictive method to determine which loan offer is the best fit for a customer. In turn, this lowers the fallout rate and ultimately the cost of acquisition per customer.

Q: Are mobile devices changing the way lenders and borrowers interact? What do lenders need to do to leverage an omnichannel solution? A: Mobile devices are absolutely changing the interactions between lenders and customers. The vast majority of customers have access to a smart phone and they’re relying on that device for everything from simple searches on products and services to applying for accounts, including mortgages. Mortgage lenders need to adopt an omnichannel approach, which means that customers have the same experience regardless of how they approach the lender.

In addition, the origination process has to be optimized for mobile. Lenders should insist that any vendors that they work with provide a mobile interface that is easy for customers to use.

SPONSOR CONTENT FROMINFORMATIVE RESEARCH

About Informative Research Informative Research is an innovative technology solutions leader that serves over 3,000 mortgage companies, banks, and lenders across the United States. Informative Research is renowned for substantially streamlining the loan process with their straightforward customer service model and progressive solutions.

For more information, contact one of their team members at (800) 473-4633 or [email protected].

Produced by SourceMedia Marketing Solutions Group, National Mortgage News, October 2018

1 https://www.mba.org/2018-press-releases/april/production-volume-and-profits-down-in-2017-for-independent-mortgage-bankers2 https://www.salesforce.com/research/customer-expectations/

Patrick BucknerPresident of Data SolutionsInfomative Research

Outlook

008_NMN1018 8 9/28/18 6:05 PM008_NMN1018 8 10/1/2018 1:57:34 PM

WE BELIEVE…Unity is our strength.

From single-family to commercial and multifamily; from loan originators to investors, we are the force that ensures a safe and sustainablereal estate fi nance system.

The strength of what we do every day for millions of Americans and our nation’s economy lies not with each of us, but with all of us as we unite as a collective group. Together, we are able to amplify our voice and drive change for our industry in Washington and across the nation.

We lead strong as one. United, we create the future of our industry.

TO LEARN MORE, VISIT MBA.ORG/BELIEVE

19474

009_NMN1018 9 10/1/2018 1:57:34 PM


require CRE lenders to obtain property eval-uations on collateral eligible for appraisal waivers, a similar requirement is not included in the SBA bills, the appraisal group said.

As a result, the bills “fail to fully align the SBA requirements with those of the federal bank regulatory agencies,” the Appraisal Institute letter reads.

“Evaluations have specific development and reporting requirements smaller in scope than appraisals; however, the SBA does not require evaluations, and neither bill includes corresponding evaluation re-quirements,” the group added.

With the 2018 federal fiscal year just end-ing, the SBA has guaranteed more than 58,000 loans under the 7(a) program to-taling over $24.5 billion. Meanwhile, nearly 5,800 loans totaling more than $4.6 billion have been guaranteed under the 504 pro-gram, according to SBA data.

In the 7(a) program, loan balances between $350,000 and $2 million account for 44% of total dollar volume. About 30% of the to-tal dollar volume was for 7(a) loans over $2 million. In the 504 program, about 56% of the dollar volume went to loans between $350,000 and $2 million, and 34% of the dol-lar volume was for loans over $2 million.

The Appraisal Institute “is making a mountain out of a molehill” when it comes to the pair of bills, said Chris Hurn, CEO of Fountainhead Commercial Capital, an SBA 504 lender based in Orlando, Fla.

When it comes to risk, nonbank lenders like Fountainhead “are just as careful as any regulated entity and we should be or we will go out of business,” Hurn said.

Even though he supports the legislation, Fountainhead will likely still get an appraisal on properties in transactions in the $300,000 to $400,000 range. “I just think it’s a good best practice,” Hurn said. “Part of good com-mercial real estate lending is making sure you understand what your collateral is worth.”

Currently, the SBA does not require lenders to obtain property evaluations on loans ex-empt from appraisal requirements. But noth-ing in the current bills to raise the appraisal

Origination

Small business lendingOver $24.5 billion of SBA 7(a) loans were originated year-to-date in fiscal year 2018

Under $150K, 9%

$150K-$350K, 11%

$350K-$2M, 44%

Over $2M, 36%

Source: Small Business Administration

Appraisers Balk at Plan to ‘Virtually Eliminate’ SBA Property Valuations

By Brad Finkelstein

The House of Representatives passed two bills that would tie appraisal waivers for Small Business Administration loans to bank rules for commercial real estate loans, despite objections from the Appraisal Institute about its members being cut out of transactions.

The House of Representatives passed two bills that would tie appraisal require-ments for Small Business Administration loans to bank regulators’ requirements for all commercial real estate loans. But the plan has been met with opposition from the Appraisal Institute, which claims the SBA will take on unnecessary risk if its members are cut out of transactions.

Following a rule change by the Federal Reserve Board, the Office of the Comp-troller of the Currency and Federal De-posit Insurance Corp. earlier this year, banks are not required to obtain ap-praisals on the collateral backing com-mercial real estate loans if the property

is worth less than $500,000. Previously, the threshold was $250,000.

The bills, H.R. 6347, the “7(a) Real Estate Appraisal Harmonization Act,” and H.R. 6348, the “Small Business Access to Cap-ital and Efficiency Act,” would remove the current statutory $250,000 limit for SBA loan appraisal waivers and instead rely on the banking regulators’ standards. Both bills passed on a voice vote taken on Sept. 25, but their fate in the Senate is unclear.

The higher thresholds would “virtually elim-inate” the need to get appraisals for SBA 7(a) and 504 loans, the Appraisal Institute warned in a letter to House Speaker Paul Ryan be-fore the vote. And while banking regulators

010_NMN011018 10 10/1/2018 2:48:17 PM


Origination

waiver threshold would prevent the SBA from re-quiring evaluations in the future, agency spokes-woman Carol Wilkerson said in an email to NMN.

By not specifying how SBA lenders should assess the value of collateral, the bills are “too broad because they are enabling any kind of valuation, they’re not specific about a par-ticular type of tool, whether it’s an appraisal, whether it’s a commercial evaluation or even a broker price opinion,” said Randy Fuchs, the principal at Boxwood Means, a Stamford, Conn., company that provides evaluations on small balance commercial loans.

The goal of the bills is to reduce lender costs and reduce third-party borrower costs for small businesses trying to grow, Fuchs said. “We would hope further discussions about the legislation would refine it so that the minimal tool … would be evaluations.”

A commercial property evaluation “is a rig-orous, detailed analysis that may use the sales comparison approach and/or the sales and in-come approach” to determine a value, he ex-plained. A BPO may just be a simple average of three comparable property valuations. Such valuations are not typically the core compe-tency of the person performing them.

On the other hand, using appraisals for many of these loans “is like using a sledgehammer to kill a fly,” he said. Commercial evaluations are more like using “a flyswatter,” because they are more efficient and more cost-effective. Commercial appraisal costs do not adjust based on the proj-ect size, so the costs are the same on a $300,000 deal as they are on a $3 million one, he noted.

Technology and data analytics can also pro-vide reliable property valuations and keep risk in check, said John Moshier, the president of ReadyCap Commercial, an SBA 7(a) lender.

“We would get some type of evaluation done [if the bill passed] but there are more cost-effec-tive ways to do it out there,” he said. “That’s called prudent lending. In my mind you need to have some type of methodology to evaluate” a prop-erty’s worth. “You have to be a prudent lender, no matter what the regulations say, what the law says.” The bills are “right-sizing” the SBA program with conventional commercial real estate lending when it comes to appraisal requirements. NMN

Origination

Hybrid eClose.

Visit Booth 542 or le

arn more at idsdoc.com

Fast.

Secure.

Accurate.

Customizable.

IDS, Inc. is paving the way to the future of eMortgages.

Are you?

011_NMN011018 11 10/1/2018 2:48:19 PM


Secondary

“I think the new CEO [at each company] is going to quickly be confronted with a new FHFA director who is going to be looking to shrink the GSE footprint, and likely find a way to recapitalize and release Fannie and Freddie from conservatorship,” Rood said.

Egbert Perry, the chairman of Fannie’s board, declined to discuss the specific pa-rameters for Fannie’s CEO search that will occur over the next few months except to say that its next leader must be able to handle the new demands Fannie will face — and that includes satisfying the FHFA’s performance and risk management goals.

“The first stage was: How did we get to conservatorship? The next stage was: Now that we understand what has happened and what’s going on, let’s figure out what we need to do to stabilize the organiza-tion,” Perry said. “The third stage is: OK, the world around us is changing. How do we embrace that and try to move the organi-zation into a place where it is still able to deliver on its mission?”

Fannie’s current CEO, Tim Mayopoulos, “laid the foundation for the early phase of stage three,” Perry said. The next CEO will take it from there. The Fannie CEO job is a hard one, Mayopoulos acknowledged. The company is still in conservatorship and the focus of intense regulatory scrutiny, he said.

“There are still plenty of challenges, but the role the institution plays presents a real opportunity,” Mayopoulos said. “Housing is a good 15%-20% of the national economy and, so, to lead the biggest player in that market — setting standards and driving progress — is a great responsibility to have.”

Whether either of the GSEs will choose an internal candidate to be the next CEO, like Fannie did when it moved Mayopou-los into the post, or whether either of the agencies will recruit an external one, like Freddie Mac did when it first hired current CEO Don Layton, remains to be seen.

Freddie says it is considering its new president, David Brickman, as one of its CEO candidates, but it is continuing to look at external candidates as well. NMN

Why It Will Be Hard to Find New CEOs for Fannie and Freddie

By Bonnie Sinnock

The CEOs of Fannie Mae and Freddie Mac are stepping down because the job they were hired to do — return the GSEs to profitability — is done. But attracting top-flight candidates to lead the mortgage giants into a new phase may not be easy.

The return to financial stability at Fannie Mae and Freddie Mac resolves a big problem from the past, but each government-spon-sored enterprise must now turn to a task that will shape its future: picking a new CEO.

In contrast to a decade ago, when the Great Recession decimated their finances and government officials placed them into conservatorship, Fannie and Freddie are profitable. The leaders originally charged with restoring their profitability are stepping down because they consider their jobs done.

That leaves the GSEs to find CEOs who can lead them into a new phase, and at-tracting top-flight candidates may not be easy. One hurdle to finding qualified can-

didates is that there is a $600,000 cap on compensation that would amount to a pay cut relative to the current salaries of Fannie Mae’s or Freddie Mac’s executives, or any-one with similar private market experience.

“The money is nothing to scoff at, but it seems like a paltry sum compared to what executives at investment or large, mon-ey-center banks command,” said Tim Rood, chairman of the Collingwood Group.

Also, candidates for the two jobs must be willing to work in a very uncertain environ-ment, under the oversight of a regulator — the FHFA — that like the GSEs themselves is being closely watched by lawmakers and is about to undergo a leadership change.

Blo

omb

erg

New

s

012_NMN011018 12 10/1/2018 2:48:20 PM

Caliber Home Loans, Inc., 1525 S. Beltline Rd., Coppell, TX 75019 (NMLS #15622). 1-800-401-6587. Copyright © 2018. All Rights Reserved. Equal Housing Lender. For real estate and lending professionalsonly and not for distribution to consumers. All loans will be required to meet ATR requirements to be Eligible. Not all products offered in states of NY, ME, MA. #25887_NMP

Wholesale Lending

Visit us at www.caliberwholesale.com to learn more.

Introducing Elite Access... Caliber’s latest Portfolio offering.

■ Purchase loans and rate/term refi nances to $2 millionwith a 740 FICO, 95% LTV and 9 months’ reserves, no MI.

■ Purchase loans and rate/term refi nances to $3 millionwith a 700 FICO, 90% LTV and 9 months’ reserves, no MI.

■ Interest-Only ARM loans up to $3 million with a 75% -90% LTV ratio.

■ DTI ratios up to 45%.

■ Cash-out refi nancing to $500,000 ($750,000 for debtconsolidation).

■ Asset depletion qualifying allowed.

■ 100% gift funds permitted from family members. Giftsnot allowed on loans >90% LTV.

■ 1-4 unit properties, 1-unit Co-operative units, PUDs,warrantable and non-warrantable condos allowed.

■ Unlimited primary fi nanced properties allowed. Caliber provided fi nancing for up to fi ve properties with a max unpaid principal balance of $3 million is allowed.

Caliber PortfolioLending

As home prices continue to rise, Caliber Home Loans Inc. continues to rise to the occasion. That’s whywe’re thrilled to tell you about our newest Portfolio product: Caliber Elite Access.

We designed Elite Access to meet the demands of your borrowers in high-cost areas. Features include:

013_NMN1018 13 10/1/2018 1:57:36 PM


Servicing

Another use for AI and bots in mortgag-es is to help fill out the application.

With the use of speech recognition and natural language processing, an assistant could listen to a conversation between the loan officer and a potential borrower and start extracting data. That could save time and potentially reduce errors.

AI could also be used to help underwrit-ers search databases consistently for com-pliance purposes.

“Today there’s tremendous amounts of content and the guidelines from all the reg-ulators and the investors that an underwrit-er needs to have at their fingertips and they take a lot of time searching through those to find something relevant,” Stubbs said. Jane.ai and IBM’s Watson, for example, can ingest that kind of data and answer ques-tions about regulatory guidelines.

Fannie Mae is already using AI to help pre-dict if a loan is going to go into default, ac-cording to Mona Kahn, director of securitiza-tion and servicing technology at Fannie Mae.

In another use case, Fannie is a consumer of customer comments or “tips” made through a bot as well as through calls and emails.

“We’re doing natural language process-ing work looking at, how do we predict if that’s really a true fraud tip?” said Kahn. AI can help figure out what those patterns are.

At TIAA Bank, David Andrews, vice pres-ident of home lending strategy, is building out a use case for AI that helps avoid dis-appointing borrowers.

“A problem we had was we set the ex-pectations up front and then we would find something out two weeks down the road because it was buried in some document a loan officer glossed over or a processor didn’t catch,” Andrews said.

When the loan finally got to underwrit-ing, the problem would be discovered — a judgment, say, or a lien on credit.

The bank is using Blend’s version of AI and machine learning to uncover such problems closer to the time of the loan ap-plication. Loan officers review this work, however, as the technology is still new. NMN

How AI Virtual Assistants (Like Alexa) Could Reshape Mortgages

By Penny Crosman

An AI-powered virtual assistant could be used in a variety of ways, including helping customers to prequalify for mortgages, easing compliance and detecting problems.

Although artificial intelligence is not yet ca-pable of handling a mortgage from start to finish, several lenders are increasingly turning to the technology for a variety of scenarios.

Chief among them is pairing AI-based chatbots with mortgages. Rocky Stubbs, who at Capital One helped develop one of the first Alexa skills for home loans, says AI will soon be more ubiquitous.

“That first Alexa Skill was very simple, just, ‘Hey Alexa, make my mortgage pay-ment,’” said Stubbs, who is now senior vice president and head of consumer direct and digital mortgage lending at Flagstar Bank. “The use cases for the various systems are reactive: we ask them something and they complete one task.”

But over time, just as Siri can recognize traffic patterns and predict a slow com-mute, chatbots will start to learn about us-ers’ financial profiles and offer predictions and advice around finances.

Instead of being siloed, the way Siri, Cor-tana and Alexa are, the next wave of virtu-al assistants will be more like Jarvis from Iron Man, Stubbs said.

“No matter where [Tony Stark] went, it was in his suit, in the car, in the house,” Stubbs pointed out. “That assistant is go-ing to become much more familiar. We’re going to be able to interact with it in a lot more different ways.”

This kind of technology could be used to prequalify people for mortgages.

Blo

omb

erg

New

s

014_NMN011018 14 10/1/2018 2:48:22 PM

Servicing

Hurricane Florence’s flooding and wind destruction affected about 700,000 residential and commercial properties across North Carolina, South Carolina and Virginia, according to Core-Logic’s latest estimates.

While the mortgage delin-quency rate fell to a 12-year low last month, that number will be on the rise in the coming months due to Florence and the impact of the impending hurricane sea-son. If last year was any indica-tion, the delinquency rate could peak above 4.5% by December. Any housing markets devastat-ed by Florence and all hurri-canes that follow will still be on the mend a year from now.

Worst-case projections esti-mate a total of $28.5 billion in storm surge and inland flooding losses, plus an additional $1.5 bil-lion in wind damage. Of the surge and flooding losses, an estimated $18.5 billion are uninsured.

“The uninsured losses make up such a large share of the total — a greater percentage than Hurricane Harvey last year — because Florence is primar-ily a flood event, and insurance coverage for flood is limited, es-pecially on the residential side,” David Smith, senior director of model development at CoreLog-ic, said in a statement to NMN.

“Flood insurance is only man-datory for homes with mortgag-es that are located within FEMA’s special flood hazard areas — es-sentially 100-year flood zones. Many of the homes impacted by Florence are outside of these ar-eas, and some of the homes within the SFHAs don’t carry mortgages.”

North Carolina bore the brunt of the storm and holds the majori-ty of the estimated damage.

About 80% of both residential and commercial properties and losses lie in the Tar Heel State,

with South Carolina accounting for close to the remaining 20% of the properties. NMN

ServicingNearly 700,000 Properties Damaged by FlorenceBy Paul Centopani

015_NMN011018 15 10/1/2018 2:48:25 PM


Technology

hour a week to consider how they can in-novate and change how they do business.

When Rocket Mortgage began, around 9% to 10% of customers were coming to Quick-en Loans through the application. Now, 98% of Quicken’s customers come to the compa-ny through Rocket Mortgage. Two-thirds of those customers want to buy a home and 70% of them are first-time homebuyers.

“There are people today that will buy a house without walking into it. Not many, it’s still early, but the technology exists for people to see these homes go through with a video tour,” Emerson said.

“Ninety to 95% of people start their home search online, similarly with the mortgage process. If we’re not thinking about how to integrate those two things then the consumer of today and tomorrow will disintermediate us for the people who are doing that.”

With the average age of millennials be-ing 29 and the average age of first-time homebuyers being 32, mortgage lenders need to be actively evaluating the millen-nial generation, Emerson said.

“This generation hasn’t even gotten to the place where they are going to start transacting,” he said.

“Yet this is a generation that cares about simplicity, ease and does everything they can possibly do on their phone.”

The generation that is behind millen-nials will require even more digital tools, including gamification.

“I was at the meeting the other day and the concept of e-sports came up,” Em-erson said. “People literally go to watch people play a game on a screen. It’s a whole different landscape and a whole different world, and we have to get our brain around that.” NMN

Quicken Loans’ Prescription For Mortgage Lenders

By Nathan DiCamillo

Bill Emerson, the vice chairman of Quicken Loans, said that mortgage lenders need to give time to consider innovation and not be deterred by naysayers.

When Quicken Loans introduced Rock-et Mortgage in a 60-second commercial during the 2015 Super Bowl, Bill Emerson had to convince regulators that digital mortgages wouldn’t create another fi-nancial crisis.

“I can’t tell you how many folks I had to go talk to in Washington, D.C., to try to explain what was really going on here,” said Emerson, the vice chairman of Quicken Loans and its parent company Rock Holdings Inc.

“That the world wasn’t going to end again. That we were really just taking the current underwriting model and making it simpler and easier for human beings. That we created a better, safer and sim-

pler process for everyone to participate in the mortgage space.”

Emerson also had to defend himself to industry insiders.

“If I had a dime for every time that someone told me while we were at an in-dustry event that we were crazy for hav-ing a centralized model, for not having feet-on-the-street loan officers. If I had a dime for every time someone told me that, ‘Wait till rates go up, wait till the market shifts, you guys won’t be around anymore,’” Emerson said.

Emerson asked mortgage lenders at the 2018 Digital Mortgage Conference in Las Vegas last month to think like technolo-gists and give their employees at least one

”If I had a dime for every time someone told me that, ‘Wait till rates go up, wait till the market shifts, you guys won’t be around anymore.’”

016_NMN011018 16 10/1/2018 2:48:27 PM

SHINING THE LIGHT ON

NON-QM LENDING

Deephaven Mortgage® LLC. All rights reserved. This material is intended solely for the use of licensed mortgage professionals. Distribution to consumers is strictly prohibited. Program and rates are subject to change without notice. Not available in all states. Terms subject to qualification. For more information on Deephaven’s state licensing, visit the NMLS Consumer Access webpage at http://nmlsconsumeraccess.org/. NMLS #958425

Millions of potential borrowers are locked out of today’s conventional mortgage market.

Deephaven Mortgage is shining the light on Non-QM lending by providing products specifically designed to address the needs of millions of borrowers who are unable to obtain a traditional mortgage. In return, this allows originators to expand their business by reaching out to a broader group of borrowers.

Help shine the light on Non-QM for your potential borrowers. Contact us by visiting www.deephavenmortgage.com and selecting either Correspondent or Wholesale. We look forward to you getting in touch with us today!

017_NMN1018 17 10/1/2018 1:57:36 PM


Compliance & Regulation

duces crumbling and unsafe housing stock in many urban and rural communities, and slows economic growth.”

“Homeownership is the primary way that American families build wealth — but for decades, misguided and discriminato-ry Federal policy has excluded millions of families from the American dream,” the summary said.

The bill, called the American Housing and Economic Mobility Act, would also prohibit discrimination on the basis of sexual orien-tation, gender identity, marital status and source of income, among other things.

The proposed revamp of CRA and oth-er housing policies would face an uphill battle under a Republican president and with odds favoring the GOP retaining Sen-ate control in the midterm elections. But Warren’s plan could gain clout as Demo-crats are expected to pick up congressio-nal seats this November, particularly in the House, and as the Massachusetts senator is widely speculated to be considering a presidential run in 2020.

The plan also adds a significant wrinkle to pending efforts by the regulators, led by the Office of the Comptroller of the Cur-rency, to modernize CRA policy.

In August, the OCC issued an advance notice of proposed rulemaking asking for comment on more than 30 questions about how to revamp the CRA. Regulators are considering whether to expand the as-sessment areas where banks are graded for their community lending and changing the ratings system itself, which Comptrol-ler Joseph Otting said would be a more transparent and accurate system.

Consumer groups have long argued the CRA grades are unclear and lack teeth. Warren’s proposal focuses more on protect-ing consumers against discrimination, which could create an added layer of enforcement.

Consumer groups have argued that the grading system has strayed from the original intention of CRA that was meant to stop banks from “redlining” whole communities. NMN

Warren Wades into CRA Overhaul With Revamp Plan of Her Own

By Neil Haggerty & Rachel Witkowski

The senator’s bill to reform the 40-year-old law and expand housing investments could gain clout as Democrats look to pick up congressional seats and she eyes a presidential run.

Sen. Elizabeth Warren, D-Mass., threw a new twist into efforts to reform the Com-munity Reinvestment Act.

Just as the federal bank regulators try to modernize their CRA policy through reforms authorized under the current law, Warren released a bill that would apply CRA re-quirements to a broader array of institutions — including credit unions — and make pen-alties for tougher for any violations.

“Obligations under the Community Re-investment Act ... to provide credit to low-er-income and middle-class communities are too weak,” according to a summary of the bill, which includes other housing and economic proposals. “The bill extends the law to cover more financial institutions,

promotes investment in activities that help poor and middle-class communities, and strengthens sanctions against institutions that fail to follow the rules.”

Whereas now the law only applies to FDIC-insured banks, both credit unions and nonbank mortgage originators would have to follow CRA requirements under the proposal. Warren’s bill also proposes bil-lions of dollars of new investments into af-fordable housing trust funds. Those include $445 billion into the Housing Trust Fund and $25 billion in the Capital Magnet Fund.

The summary of the bill said reductions in investments for lower-income and mid-dle-class housing projects “creates short-ages that drive up costs for everyone, pro-

Blo

omb

erg

New

s

018_NMN011018 18 10/1/2018 2:48:28 PM

Appraisal Valuations | Mortgage Servicing Solutions | Loss Mitigation Services

Capital Markets Services | Collateral Integrity Services | Commercial Due Diligence Services

1031 Exchanges | National Signing Services | Digital Closing Solutions

Electronic and Wet Ink Signature Capture | e-Recording Services

… and of course, Residential & Commercial Title/Settlement

OLDREPUBLICTITLE.COM/MORETHANTITLE

TAKE A CLOSER LOOK

WE’LL SEE YOU AT THE MBA ANNUAL CONVENTION IN D.C. BOOTH #232

WE ARE MORE THAN TITLE

10/2018 | © Old Republic Title | Old Republic Title’s underwriters are Old Republic National Title Insurance Company and American Guaranty Title Insurance Company.

019_NMN1018 19 10/1/2018 1:57:42 PM


The Lender’s AdvocateAs the industry confronts tight margins, shifting market share and

regulatory uncertainty, a new leader emerges at the MBA

By Austin Kilgore

After 30 years in mortgage finance, Robert Broeksmit has estab-lished a reputation for being meticulous, an exceptional communi-cator and a thoughtful leader.

The industry veteran will need all those qualities in his new role as president and chief executive officer of the Mortgage Bankers Associ-ation, a position he assumed in August from the retiring David Stevens.

Broeksmit, 54, is the youngest of six children of an Episcopal minis-ter and grew up in rural Illinois. He got his first job, delivering newspa-pers, at age 9. After graduating from Yale University in 1985, he took what was supposed to be a temporary job doing clerical work for the New Jersey-based mortgage lender The Money Store. He would go on to hold virtually every job imaginable in the origination business, eventually becoming president of B.F. Saul Mortgage Co., a division of Chevy Chase Bank in Maryland, in his mid-30s.

“The thing I noticed about Bob very early on is he knows what’s in a mortgage loan file. He can explain every piece of paper that’s in an inch-and-a-half-thick file and what its purpose is,” said Alex Boyle, for-mer vice chairman of Chevy Chase. “He understands loan processing and loan underwriting thoroughly, and yet he has a very broad-based understanding of the whole industry and the secondary market.”

The start of Broeksmit’s tenure is arguably the first “peaceful transition” at the top of the MBA in the past 20 years, the result of a period of stability and financial security for the nearly 105-year-old association that his recent predecessors did not enjoy.

However, the same cannot be said for the industry it serves.At its core, the MBA is a lobbying organization. And while it can

claim victory for the regulatory relief that mortgage companies re-ceived in the Dodd-Frank Act rollback that President Trump signed earlier this year, regulatory uncertainty abounds — particularly when it comes to housing finance reform and the conservatorship of Fannie Mae and Freddie Mac.

Meanwhile, mortgage companies face harrowing conditions in originations. As interest rates continue to rise from the historic lows of a few years ago, purchase lending now dominates the market. Yet severe housing inventory shortages have put a damper on vol-ume. And many lenders are expecting the next few years to mark the first period of significant increases in mortgage rates since the late 1970s and early 1980s.

What’s more, market share is rapidly shifting from large de-positories to small and midsize nonbank lenders that face unique challenges controlling costs and building scale. The MBA has al-ready begun to redirect its education and member development programming to cater to this growing segment. These efforts are essential to ensuring the MBA has a robust membership base.

Likewise, the demographic makeups of both the industry’s cus-tomer base and workforce are going through a transition, and the MBA must play a key role in preparing its members to attract the next generation of mortgage professionals and homeowners.

JASO

N S

EILE

R

020_NMN011018 20 10/1/2018 2:44:21 PM


021_NMN011018 21 10/1/2018 2:44:32 PM


Broeksmit spent most of his youth in Dwight, Ill., a town of less than 4,000 people about 80 miles southwest of Chicago. Corn and soybean fields fill the landscape, and Route 66 cuts through the center of town. His family lived in a parsonage next to the church where his father preached.

It was a rather humble upbringing, but it still came with a lot of expectations. Broek-smit’s father had attended Yale, while his mother went to Vassar College. He would go on to be the fourth generation on his mother’s side and third on his father’s side to attend Yale.

“There was a certain amount of educa-tional pedigree, but there wasn’t any mon-ey,” Broeksmit said.

And despite growing up in a small town where everyone knows everybody’s busi-ness, Broeksmit found ways to get away with mischief-making.

“The organist at our church moonlighted as a waitress at the truck stop, and the truck stop is where we would go late at night or early in the morning after having misbe-haved,” Broeksmit said. “And she would wait on us, and it was obvious that we’d been having fun, and then I’d see her at church the next morning and not a word was spoken. So that was a pretty good setup actually.”

A few years into his career, Broeksmit moved to Frederick, Md., to join Pruden-tial Mortgage. There he met Bruce Muller, who took Broeksmit under his wing. The two worked together until Prudential was acquired by Norwest in 1996. (Norwest then merged with Wells Fargo in 1998.) The pair moved on to Chevy Chase, a sav-ings and loan headquartered in the Mary-land suburbs of Washington.

Muller, a Marine Corps veteran who served in the Vietnam War, “swore like a sailor,” Broeksmit said, but he had an in-nate understanding of mortgage opera-tions. His example laid the foundation for Broeksmit’s leadership style.

“I learned a lot from him, and beneath this gruff exterior, which he retains to this day, he had a heart of gold,” Broeksmit said of his old boss. “He would go out with the people on the line, the processors, and the under-writers and the closers, and he’d get to know them really well, and he would know who’s a single mother or, you know, somebody who’s maybe going through a tough time, and he would do things like clip out diaper coupons and take them to these co-workers.”

When Muller retired from Chevy Chase, he recommended Broeksmit take his place. “He brings out the best in the people around him,” Muller said of his protege. “He’s the type of guy who can take an average performer and turn him into an exceptional performer, and he doesn’t even know it’s happening.”

It was unusual for the closely held bank to promote a young executive into such a high-profile role. “His detailed knowledge gave him instant credibility with the people who were reporting to him, who by and large were much older,” said Boyle. “He’s a good leader. He speaks effectively in front of a group of loans officers or brokers or under-writers — he just has that kind of gift.”

Broeksmit ran Chevy Chase’s mortgage unit until 2009, when it was acquired by Capital One. It was during this time that Broeksmit got involved with the MBA. Working so close to the nation’s capital and the government-sponsored enterpris-es, Broeksmit saw an opportunity to shape the direction of the industry.

“I found that by engaging both with the GSEs and with the MBA that I got a lot out of the networking and sharing best prac-tices with my peers,” he said. “I understood from my following the political process that the government in one way or another was extremely involved in housing and hous-ing finance, and that seeking to have our industry’s voice heard in that setting was really important not only to my livelihood, but to an industry that I really believe in.”

Broeksmit lives in Maryland and is a registered Republican, according to state voter records. He has personally made more than $30,000 in political contribu-tions to the MBA Political Action Com-mittee, MORPAC, since 2002, according to public data compiled by the Center for Responsive Politics. Since 2004, he has also donated nearly $6,750 to Democrats and $1,400 to Republicans, including a contribution to Ohio Gov. John Kasich’s presidential campaign.

While serving as chairman of the MBA’s Residential Board of Governors in Sep-tember 2006, Broeksmit testified before a Senate Banking Committee subcommit-tee about the growing prevalence of non-traditional mortgage products.

In his written testimony, Broeksmit de-fended the industry’s use of interest-only, payment option and other negative amor-tization products, as well as “streamlined underwriting” — practices that require less borrower documentation.

“I strongly believe that the market’s suc-cess in making these ‘nontraditional’ prod-ucts available is a positive development, not cause for alarm,” he wrote.

During the hearing, Broeksmit decried calls for lenders to rein in the scope of products available to borrowers.

“You know, it wasn’t all that long ago that our industry was addressing con-cerns about the availability of credit to all borrowers,” Broeksmit told the sub-committee. “It seems we are victims of our own success to a degree, as the dis-cussion now concerns whether some of the many credit options available to bor-rowers are appropriate for them.”

Later, when asked by Sen. Charles Schumer, D-N.Y., if he expected the use of payment option adjustable-rate mort-gages to increase, Broeksmit reiterated his support: “I believe they are a good product for a large segment of the population.”

022_NMN011018 22 10/1/2018 2:44:32 PM

CALL JEFF VOYLES OR SCOTT WALKER AT 901-759-7770. FTB.COM/WAREHOUSELENDING

Our warehouse lending program has been proving its commitment to our customers since 1998. Let us show you the First Tennessee advantage.

©2018 First Tennessee Bank National Association operating as First Tennessee Bank and Capital Bank. Member FDIC.

“First Tennessee Mortgage Warehouse Lending stands committed to meet the evolving needs of the nation’s independent mortgage bankers. We o� er a dedicated team, supported by proprietary systems and specialists at every level. We believe our reputation of consistency and fairness has been built over many years, and we seek ways to improve every day.”

JEFF VOYLESVP, Relationship Manager, Warehouse Lending

023_NMN1018 23 10/1/2018 1:57:42 PM


Navigating the BeltwayOnce again in his career, Broeksmit

finds himself with big shoes to fill. Ste-vens, who served as Federal Housing Administration commissioner during the Obama administration, is credit-ed for resuscitating the MBA following the fallout from the recession and nu-merous self-inflicted wounds, includ-ing the costly decision to purchase, then walk away from, an office build-ing that had been its headquarters.

While Broeksmit’s credentials as a mortgage professional are well-estab-lished, it remains to be seen how quick-ly he’ll take to the advocacy role that’s essential to running the MBA.

“Bob’s got a ton of experience — he knows the issues. But he hasn’t spent as much time in D.C.,” said Bill Emer-son, vice chairman of Quicken Loans and a former MBA board chairman. “Dave was there previous to coming in the MBA. He was probably more well-connected than Bob is coming out of the gate.”

Broeksmit’s limited political track record could play to his advantage, particularly given the divisiveness that exists on Capitol Hill.

“The MBA at times has been too political in the past few years, instead of focusing on policy decisions all the time,” said David Kittle, president of The Mortgage Collaborative, a con-sortium of independent mortgage bankers. “It got too political around elections and everything else.”

Kittle, who has served in a vari-ety of volunteer leadership roles at the MBA, including chairman of the board and of MORPAC, said he was being vetted by the Trump ad-ministration to serve as president of Ginnie Mae before he withdrew his name from consideration.

Regardless of personal ideolo-gy, the association’s leaders must maintain neutrality to be effective no matter what party is in control of Congress, Kittle said. “When you run the association, you can’t let your political persuasions show.”

The most important lobbying issue the MBA currently faces is GSE reform. In addition to advocating for an end to Fannie and Freddie’s conservator-ship, the MBA is focused on ensuring administrative changes enacted by the Federal Housing Finance Agency are codified in any reform legislation, Broeksmit said. For example, the MBA has called for rules that prohibit Fan-nie and Freddie from offering large lenders bulk discounts on guarantee fees to remain intact. So-called G-fee parity has promoted competition among small and midsize lenders.

Strength in Numbers

The greatest source of the MBA’s influence in Washington is also one of the most challenging things it has to manage.

“I think the MBA is a very strong voice for the industry,” said Emerson. “It represents such a broad group. It represents large depository institu-tions and small independents and everything in between.”

But the various factions of mortgage companies sometimes clash. And as midsize nonbank lenders have grown in size and sophistication, the MBA has had to adapt to meet their needs.

“Advocating for the industry as a whole, while acknowledging the dif-ference in business models and giving those members opportunities to inter-act and to have the ear of senior lead-ership at MBA, I think, has been very important,” Broeksmit said.

024_NMN011018 24 10/1/2018 5:13:59 PM


Of particular concern for inde-pendent mortgage banks right now are tightening margins as a result of lost volume and housing inventory shortages. If left un-checked, the trend could reduce the MBA’s membership numbers.

“No small or midsize IMB out there is really going to make any money this year,” said Kit-tle. “It’s an M&A environment. So the challenge he faces is going to be continuing to grow the MBA. Not that it won’t still be profitable, but to grow it.”

As the industry workforce continues to near retirement, lenders and servicers must also focus on identifying and hiring the next generation of mort-gage professionals.

“Our industry in general has to take a look at itself and it has to get younger and it has to get more diverse to be rele-vant to the borrowing base of the future,” said Emerson.

The MBA has taken early steps, such as creating a fo-rum for young professionals. It has also organized recruiting events at historically black col-leges and universities to intro-duce careers in the mortgage industry to a broader audience, Broeksmit said.

“It’s critically important that the people in the mortgage in-dustry look more like the bor-rowers. And we’re behind in that, I think everyone would ac-knowledge. But we are taking some steps as an association and more importantly, with our membership, to address that problem,” he said. NMN

FinLocker_Print-Ad-Full+bleed.pdf 1 9/24/2018 10:53:57 AM

025_NMN011018 25 10/1/2018 2:44:37 PM


Voices

hope and, more importantly, prosperity and opportunities. I have been involved in investing hundreds of millions of dol-lars in community development, reinvest-ment and support for groups that provide important services to their communities. I applaud the work of these groups and the bankers they work with to positively affect our nation’s neighborhoods.

As a result of how the CRA regulations have evolved during the last 40 years, I have also seen how the limitations of these regulations can restrict lending and lead to investment deserts that CRA activity often fails to reach by preventing banks from re-ceiving consideration when they want to lend and invest in communities with a need for capital. Over those four decades, the regu-lations implementing the law have become cumbersome, complex and outdated. While the law has been amended and regulations have changed through the years, CRA regu-lations have failed to keep up with the evolu-tion of how bank services are delivered, most significantly as a result of interstate branch-ing and the digitization of service. Another drawback of the current approach is the fact that performance evaluations take too long, lack transparency and suffer from subjectiv-ity that causes inconsistency from bank to bank. This inefficiency wastes resources and frustrates community development practi-tioners, bankers and regulators alike.

Stakeholders of all kinds have spoken out repeatedly that we need to make CRA regulations work better. Feedback gath-ered through public meetings and written comments by the federal banking agen-cies over a three-year period (2014-2017) called for reconsidering assessment areas; providing more incentive for banks to serve low- and moderate-income, unbanked and rural communities; reducing the burden of reporting and recordkeeping; clarifying performance measures and thresholds; and refining the CRA ratings method.

Joseph Otting is comptroller of the Office of the Comptroller of the Currency.

We Have a Once-in-a-Generation Chance to Revamp CRA. Let’s Use It

By Joseph Otting

Comptroller of the Currency Joseph Otting writes that the Community Reinvestment Act has not kept pace with changes in banking and needs to be updated.

The Community Reinvestment Act is a powerful tool to promote the vitality of our neighborhoods and encourage lending, in-vestment and other banking activities that promote economic opportuni-ty and serve the needs of low- and moderate-income com-munities across the nation. We have a once-in-a-generation opportunity to build upon that legacy of community develop-ment and make the Commu-nity Reinvestment Act work better for everyone.

The Office of the Comptroller of the Currency recently published an ad-vance notice of proposed rulemaking seek-

ing comment from all stakeholders, includ-ing community development organizations, civil rights groups, bankers and other reg-ulators, about what works with the current

CRA regulatory framework and what can be modernized to encourage more lending, in-vestment, and services where they are needed most.

As a banker for more than 30 years, I saw firsthand the benefit of CRA activity and how it makes communities vi-brant. I believe in the power of

community reinvestment to rein-vigorate financially distressed areas and to give residents of those neighborhoods

Joseph Otting

026_NMN011018 26 10/1/2018 2:44:40 PM

027_NMN1018 27 10/1/2018 1:57:43 PM


Voices

bers, which hold FHLB stock, would be the ones that take the hit.

As the former president of the Federal Home Loan Bank of New York, I view this risk as reminiscent of the savings and loan crisis of the 1980s. At that time, sav-ings and loan associations were permit-ted to use federally insured deposits to make risky loans — including investing in speculative real estate, fast food fran-chises and windmills. When these loans blew up, the result was a $132 billion tax-payer funded bailout.

Just as the S&Ls used political muscle and lobbying to expand into risky lending, today the captive insurers and the REITs are working behind closed doors in Wash-ington to rollback safeguards imposed in 2016 by the system’s regulator, the Federal Housing Finance Agency.

Legitimate mortgage companies that want to join a Federal Home Loan bank to fund their business have a tried and proven path to follow: Buy a bank or form one. But captives and REITS don’t want to do that. Why? They don’t want to pay the price for coming out of the shadows. They don’t want to comply with consumer protection regulations, the Community Reinvestment Act, bank secrecy laws, risk-based capital requirements and all the other regulations banks are required to follow.

And, of course, these shadow oper-ations don’t want to be the subject of intrusive, but necessary, safety and soundness exams, with their express and independent focus on credit quality and interest-rate risk.

Members are not the only stakeholders put at risk by shadow nonbanks’ desire for membership. The Federal Home Loan Bank System is one of the largest support-ers of affordable housing in the nation, providing hundreds of millions of dollars in housing grants each year.

Alfred DelliBovi is chairman of the board of Flushing Bank. He served as president and CEO of the FHLB of New York from 1992 to 2014.

There’s No Room for REITs, Captive Insurers at Home Loan Banks

By Alfred DelliBovi

A former Federal Home Loan bank president argues that the system should limit its exposure to risky nonbanks.

An August rating agency report should be a wake-up call to every shareholder in the eleven Federal Home Loan banks.

While the Standard and Poor’s report is overall positive on the Federal Home Loan Bank System — with an AA+/Stable rat-ing — it highlights a budding danger to the system’s 7,000 members: shadow nonbanks slowly infiltrating this vital source of liquidity for the na-tion’s local lenders.

Specifically, S&P calls out the “small, but growing, expo-sure to nondepository finan-cial institutions” as a weakness facing the Home Loan Bank Sys-tem. These “captive” insurance companies and real estate investment trusts, or REITs

— highly levered investment vehicles with very troubling “borrow short, lend long” balance sheets — seek Home Loan bank membership to access low-cost financing for their risky real estate lending.

These organizations pose a threat to the Federal Home Loan banks because, unlike tra-ditional members, they lack direct, prudential supervi-sion, they are not insured by the Federal Deposit Insur-ance Corp. and they have no real capital.

That means that, if they were to access the system

through even just one Federal Home Loan bank and their loans were to turn sour, all 11 banks and their mem-

Alfred DelliBovi

028_NMN011018 28 10/1/2018 2:44:44 PM

We’ve mastered the art of vendor consolidationOur superb collection of verification services is all you need to support your lending operation from pre-application to post close. Manage just one gallery of providers and realize greater efficiencies so you can focus on what you do best – closing loans.

Come to the master for all your verification needs.Consolidate…with the Credit Plus Collection.

© 2018 Credit Plus, Inc.

Call 800.258.3488Email [email protected] www.creditplus.com/collection

The information in this ad is provided for general informational purposes only and is not intended to convey or constitute legal advice and should not be relied upon in lieu of consultation with appropriate legal advisors. Credit Plus is not responsible for any damages or losses arising from any use of this information.

029_NMN1018 29 10/1/2018 1:57:43 PM


CALIFORNIA

COVINAJohn Stachowsky has joined LERETA

LLC, a provider of real estate tax and flood services for mortgage servicers, as director of internal sales.

Stachowsky has more than 10 years of sales leadership experience in soft-ware manufacturing and SaaS.

He comes to LERETA from ESRI, where he managed the inside sales team, and prior to ESRI he spent nine years in telecommunications at AVST, where he led several initiatives fo-cused on organizational structure and customer retention.

MASSACHUSETTSDANVERS

Mortgage Network Inc. has hired Luke Ostrowski as a sales manager and senior loan officer in its Boston branch, serving southeastern Massachusetts.

Ostrowski brings to Mortgage Net-work more than 15 years of mortgage banking experience, most recently with U.S. Bank, where he was a private wealth mortgage banker.

He has worked for a variety of mort-gage companies and banks in the Boston area.

NEW YORKNEW YORK

Calmwater Capital has hired Mi-chael Giannone as vice president in its newly opened Greater New York City office.

Giannone will lead the East Coast origination efforts between Boston and South Florida.

He has more than 10 years of ex-perience in closing multiple senior se-cured debt loans.

Before joining Calmwater Capital, Giannone was vice president of loan originations at Revere Capital, where he was responsible for sourcing, struc-

turing, underwriting and closing na-tionwide senior secured debt loans.

The firm has also hired Jeremy Bur-ton as director of originations in its Los Angeles office.

In addition to helping cover the southern California market Burton will be responsible for the Midwest, Texas and Southeast markets.

Prior to joining Calmwater Capital, he was a vice president at Garrison In-vestment Group, a private equity firm based in New York.

TEXASLEWISVILLE

Mortgage Contracting Services has promoted Bethany Ockerman and Ashley Taylor to assistant vice presi-dent positions.

Ockerman, who works in the firm’s Lewisville office, previously managed various support teams and started her career at Mortgage Contracting Ser-vices’ Tampa, Fla., office in 2011.

Taylor has held various manage-ment positions as an MCS employee since 2014 in its Ruston, La., office.

VIRGINIATYSONS

PenFed Credit Union has named Winston Wilkinson as its execu-tive vice president and president of mortgage banking.

Wilkinson brings more than 32 years of experience in large financial services firms and joins PenFed from USAA Federal Savings Bank where he served as president of mortgage and consumer real estate for the last five years.

The majority of his career was spent at Wachovia, where he served as ex-ecutive vice president in various roles, including, mortgage, wealth manage-ment, retail and commercial banking.

Wilkinson replaces Debbie Ames Naylor, who is retiring after 36 years with PenFed. NMN

People

Luke Ostrowski Danvers, MA

John Stachowsky Covina, CA

Michael Giannone New York, NY

Winston Wilkinson Lewisville, TX

Bethany Ockerman Tysons, VA

030_NMN011018 30 10/1/2018 2:44:52 PM

SUBSERVICINGINSURANCE

For Classifi ed Rates and Information Call

Dominique Gageant212-803-8882

and

[email protected]

MARKETPLACE

Customized Mortgage Solutions

1-800-388-4557 ext. 2812 | NMLS#[email protected]/mortgage

Expert and Client-Focused Component Servicing Solutions

swbc.com 866.925.4595

LENDER PLACED HAZARD & FLOODREO PROTECTION

The Name You Can Count On in Loan Servicingwww.cenlar.com

1-888-SUBSERVE (782-7378)

www.phhmortgage.com/subservicing

(609) 949-4456 [email protected]

Looking to switch subservicers?

PHH Mortgage Loan Subservicing offers:

• Transactional Transparency

• Regulatory Compliance

• Attentive Service

There’s Subservicing... And Then There’s Midwest Subservicing

(800) 229-5417 • midwestloanservices.com

NMN.indd 1 12/20/2017 2:55:06 AM

For Buyer’s Guide and Information Call Dominique Gageant

212-803-8882and

[email protected]

NATIONALMORTGAGENEWS.COM/SUBSCRIBE/MAIN.HTML

SUBSCRIBE TODAY

The Daily Briefi ng is a free e-mail newsletter that off ers our engaged audience a morning roundup of the latest news, analysis, data and opinion spanning the entire mortgage industry.

In addition to Top Stories, The Daily Briefi ng provides you with important industry topics such as:

GO TO NATIONALMORTGAGENEWS.COM/SUBSCRIBE/MAIN.HTML TO SIGN UP TODAY FOR YOUR FREE SUBSCRIPTION TO THE DAILY BRIEFING.

THERE IS NO RISK; UNSUBSCRIBE AT ANY TIME.

• Our award winning editors off ering their perspective on late breaking news.

• An overview of the latest topics shaping the mortgage industry,allowing users start discussions with other industry experts.

• Headlines, features, and opinions for professionals in the servicing sectorof the mortgage industry

DAILY BRIEFING

d32855_HalfPage_House_Ads_NMN_10x6.indd 1 9/13/16 6:12 PM

NMN.indd 2 12/20/2017 2:55:06 AM020_NMN0118 20 12/19/2017 4:56:02 PM

SUBSERVICINGINSURANCE

For Classifi ed Rates and Information Call

Dominique Gageant212-803-8882

and

[email protected]

MARKETPLACE




swbc.com 866.925.4595

LENDER PLACED HAZARD & FLOODREO PROTECTION


1-888-SUBSERVE (782-7378)








There’s Subservicing... And Then There’s Midwest Subservicing

(800) 229-5417 • midwestloanservices.com

NMN.indd 1 12/20/2017 2:55:06 AM

For Buyer’s Guide and Information Call Dominique Gageant

212-803-8882and

[email protected]

NATIONALMORTGAGENEWS.COM/SUBSCRIBE/MAIN.HTML

SUBSCRIBE TODAY

The Daily Briefi ng is a free e-mail newsletter that off ers our engaged audience a morning roundup of the latest news, analysis, data and opinion spanning the entire mortgage industry.

In addition to Top Stories, The Daily Briefi ng provides you with important industry topics such as:

GO TO NATIONALMORTGAGENEWS.COM/SUBSCRIBE/MAIN.HTML TO SIGN UP TODAY FOR YOUR FREE SUBSCRIPTION TO THE DAILY BRIEFING.

THERE IS NO RISK; UNSUBSCRIBE AT ANY TIME.

• Our award winning editors off ering their perspective on late breaking news.

• An overview of the latest topics shaping the mortgage industry,allowing users start discussions with other industry experts.

• Headlines, features, and opinions for professionals in the servicing sectorof the mortgage industry

DAILY BRIEFING

d32855_HalfPage_House_Ads_NMN_10x6.indd 1 9/13/16 6:12 PM

NMN.indd 2 12/20/2017 2:55:06 AM020_NMN0118 20 12/19/2017 4:56:02 PM

SUBSERVICING

For Classifi ed Rates and Information CallKimberlee Baker

212-803-8475and

[email protected]

MARKETPLACE





1-888-SUBSERVE (782-7378)








Single Fee Subservicing Solutions

• Transparent Servicing and Reporting• 24/7 Online Account Access• Full Service On-shore Sta�ng

NMLS #131062

Toll Free (800) 945-4506

NATIONAL MORTGAGE BANKER LOOKING TO PARTNER WITH LIKE-MINDED PROFESSIONALS

National mortgage banker in over 40 states looking to partner with like-minded professionals. We can explore joint ventures, co-ownership, branches, real estate partnerships, investor participation in servicing, etc. 24 years in business, we offer every product on the market, no legacy issues, large warehouse lines, 100 employees, great processing systems, and social media reputation. Need a bigger platform and volume to start servicing for additional revenue growth.

For Further Information Please Contact:Email: [email protected]

Number: (860) 800-6906

031_NMN1018 31 10/1/2018 1:57:44 PM


Screenshots

Out-of-Town House Hunters Are Flocking to These 10 Affordable Cities

No. 3 Atlanta, Ga.Net population inflow 2Q 2018: 5,112Net population inflow 2017: 2,767Top origin city: New York, N.Y.

No. 4 Las Vegas, Nev.Net population inflow 2Q 2018: 3,786Net population inflow 2017: 3,509Top origin city: Los Angeles, Calif.

No. 5 Portland, Ore.Net population inflow 2Q 2018: 3,614Net population inflow 2017: 1,190Top origin city: San Francisco, Calif.

No. 1 Phoenix, Ariz.Net population inflow 2Q 2018: 6,349Net population inflow 2017: 3,849Top origin city: Los Angeles, Calif.

No. 6 Austin, TexasNet population inflow 2Q 2018: 3,212Net population inflow 2017: 1,655Top origin city: San Francisco, Calif.

No. 7 Dallas, TexasNet population inflow 2Q 2018: 2,979Net population inflow 2017: 2,036Top origin city: Los Angeles, Calif.

No. 8 Miami, Fla.Net population inflow 2Q 2018: 2,575 Net population inflow 2017: 1,746Top origin city: New York, N.Y.

No. 9 San Diego, Calif.Net population inflow 2Q 2018: 2,537 Net population inflow 2017: 5,286Top origin city: Los Angeles, Calif.

No. 2 Sacramento, Calif.Net population inflow 2Q 2018: 6,208Net population inflow 2017: 4,833Top origin city: San Francisco, Calif.

No. 10 Nashville, Tenn.Net population inflow 2Q 2018: 2,462Net population inflow 2017: 1,364Top origin city: New York, N.Y.

Staggering housing prices and steep tax rates are pushing peo-ple from expensive cities along the coasts to more affordable lo-cales. Data from the second quarter of 2018 showed inhabitants of Los Angeles, San Francisco and New York fleeing their cities in search of more economical places to live, according to a Redfin analysis of Census Bureau data.

“With home prices reaching new heights in many metro areas, it’s no surprise people are continuing to move away from expensive metros in search of homeownership,” said Redfin Senior Economist Taylor Marr.

Here’s a look at the cities with the most out-of-town home shoppers. The data is based on a sample of over 1 million Redfin users searching for homes across 75 metro areas during the second quarter. The rank-ings are derived by comparing the number of out-of-towners search-ing in a metro area, minus local shoppers searching in other cities.

032_NMN011018 32 10/1/2018 2:45:00 PM

Learn more at cloudvirga.com

Proud Partners of AIMEServing Brokers

It’s time tore.boot.mortgageIntroducing the industry’s most robust POS.

Close more loans, faster than ever before.

This is mortgage, re.booted.

Cloudvirga_trade_r3.indd 1 9/14/18 2:08 PM003_NMN1018 3 10/1/2018 1:57:26 PM

004_NMN1018 4 10/1/2018 1:57:33 PM

save the date...wynn las vegas flip the cover and save 49%! 001_nmn1018 1 9/28/18 2:36 pm...

Documents