Asking The Tough Questions

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As market conditions shift, lenders are concerned about how they comply with new rules, how they attract younger borrowers, how they increase efficiency, how they remain competitive, etc. The best solution, according to Brian Koss, EVP of Mortgage Network, is to stick with what you know.

“Knowing your core customers, your core states, your core products and your core markets is important,” he said. “You need to eliminate as many variables and create constants. You can’t be everything to everybody. You have to stay true to your mission.”

This strategy has helped Mortgage Network thrive. The lender has again been honored by two state housing agencies for its commitment to providing affordable financing options to qualified first-time and low- and moderate-income borrowers.

The Pennsylvania Housing Finance Agency (PHFA) recently announced that Mortgage Network had the fourth highest loan volume under the agency’s affordable mortgage program in 2015, up from sixth last year. Meanwhile, in Massachusetts, Mortgage Network was the top producing lender of affordable mortgage products under the Massachusetts Housing Finance Agency (MassHousing) in both Hamden and Hampshire counties. Last year, Mortgage Network was the third top producing lender of MassHousing loans in the state.

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The best way to do effective lending these days is to do quality control as close to the point-of-sale as possible. “Once you’re in, you’re locked in,” noted Koss. “Quality control should be done at the point of quote. That’s hard because there are a lot of variables. Writing as much information up front is best. You want to build a better questionnaire for the borrower. Lenders that involve the consumer more and do more upfront have been the most successful.”

Based in Danvers, Massachusetts, Mortgage Network provides mortgage banking services in more than 20 states through a wide variety of retail offices built to fit each local market. Mortgage Network is more focused and agile than many larger competitors, which allows the company to provide a high level of service to its customers and its business and referral partners.

“Growth for growth’s sake is filled with risk,” noted Koss. “It’s hard to create a strong national platform. We’ve become a local business again. You have to have strong processes and systems to ensure that mistakes are not made.

“We are pure retail so we are consumer driven. It’s all about the local loan officer and their customers. We get great ideas from asking customers what they thought. If you are willing to ask and listen, you will get pearls of wisdom,” concluded Koss.

“Lenders are going to have to increasingly turn automation,” added Ann D. Fulmer, a senior industry advisor for FormFree Holdings. “Everything has to be documented, and the only way to do that is with technology. As much as can be automated, should be automated.

“One of the wild cards is how the disparate impact will be applied. You have to have processes that are in place, and you have to show that they are being applied to everybody the same. Lawyers are waiting to get their hands on data that could show if different products or processes are being used in different areas, among certain populations.”

FormFree is a provider of automated asset verifications for banks and mortgage lenders. A nationally recognized fraud expert, Fulmer is a former assistant D.A. in DeKalb County, Georgia, where she supervised investigations of white collar crimes, including real estate and mortgage fraud. Fulmer is also a speaker, author and thought leader in the areas of data integrity, regulatory compliance and mortgage risk detection and prevention. Most recently, she served as vice president of industry relations and strategy for Interthinx.

Fulmer warns that, “if a lender is only doing post closing quality control, you are spending a lot of time collecting mistakes instead of catching the mistakes early. If you are not looking at the quality control findings, you can’t go back and make sure that you are correcting these mistakes.

“In the end, it’s hard to integrate staff and systems, though. You have to make sure that everyone has the right regulatory training and the right systems. When growth happens through acquisition you always have these issues, for example.”

The secret is to never take your eye off of the consumer experience. “The biggest thing that lenders can do for consumers is to make things easy,” Fulmer said. “Mobile lending is amazing. I just purchased a home and it was mostly electronic and easy. Consumers don’t want to submit pages and pages of documentation. The trend toward mobile banking and e-mortgages is happening. The future is now.”

A lot of this responsibility falls on the LOS as the system of record. Lenders have to be smart about the LOS that they choose. “Our customers do best when they isolate their processes and document a loan consistently,” noted Lionel Urban, CEO, founding partner and chairman of the board for LOS PCLender, LLC. “There should be business logic to take care of all the steps and ensure that the steps are done. The market is unforgiving.”

One reason why the market is so unforgiving is because of the increased regulation and the pressure to comply. “The problem is that the regulations are interpreted differently. If you can’t define the regulation, you can’t define a process to address that regulation. There has to be a cure for that loan that is out of compliance, but beyond that, there has to be a cure for the process, as well,” Urban pointed out.

Prior to founding PCLender, LLC, Urban was a co-founder and CEO of Navigator Lending Solutions, Inc. (NavPros), a fulfilment services company specializing in mortgage banking services. Preceding NavPros, Lionel was the co-founder, president and CEO of PCLender.com, Inc. from 1997 to 2011.

During this time, he supervised the development of a pioneering, Internet-based mortgage technology platform supporting banks, credit unions and mortgage companies across the country. Since 1987, Lionel has acquired vast mortgage banking experience in management, origination, operations, secondary marketing and compliance roles within banks, credit unions, and independent mortgage bankers.

But in the end it all comes down to the type of people that you employ. “Mortgage executives have much to consider as they seek to grow profitability through expansion strategies,” pointed out Rick Glass, CEO of Rick Glass Executive Search. “Identifying executive leadership talent in unfamiliar geographic areas is never easy, so top management should be prepared to conduct substantial research to develop a list of the best candidates. This can, of course, take a great deal of time and effort that can distract from the everyday decisions of running a mortgage business. But taking the path of least resistance and hiring without the proper research, contact strategy, value proposition and vetting assessment can have far more serious effects and place the company at risk.

“Additionally, lenders are discovering that leading younger sales forces is quite different from leading older mortgage professionals, so the skill set for leaders is evolving rapidly. The younger Millennial group comes with different priorities, different motivators and different requirements for job satisfaction. Finding them, hiring them and succeeding with them requires leadership who truly “get” Millennials. Senior leadership must truly understand this new generation of the shared economy, with their vastly more sophisticated communications standards, notably with mobile devices, the latest apps and social media.”

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.