The Secondary Desk: Preparation Breeds Success

*Preparation Breeds Success*
**By Don Brown**

***The wrestling coach in high school always told us that “luck is what happens when preparation meets opportunity.” That maxim applies just as strongly to secondary marketing as it did back then on the mats.

****Whether a company is looking to make the transition from a best effort to a mandatory style of committing or is implementing a more sophistication platform for automating their loan allocation process, it pays to take the time to prepare well.

****For companies making the transition to mandatory commitments, it is important to build the foundation before getting started. At our company, we have developed a detailed process for nurturing organizations through this evolutionary stage in their business. This process touches focuses on all levels of the organization and addresses both internal and external factors.

****The bedrock of future success lies in ensuring that the company has translated its business philosophy into a sound body of policies and procedures. The board of directors or company leadership must have a clear understanding of the goals and boundaries of the secondary marketing strategy. What does success look like? Who is authorized to do what? What are the fail safe indicators for halting and reviewing the strategy? All of these are important questions to be thought through.

****At an operational level, the company must consider how it will handle extensions, lock changes and renegotiations. Addressing these issues in advance not only sets a clear tone for the origination staff but also enables strong coordination with your pull-through strategy when hedging.

****With the foundation in place, companies must focus on ensuring that they have the proper relationships with investors, warehouse lenders and broker/dealers. Often these relationships are a matter of clear and steady communication and reporting to ensure your partners that you are managing your business from a position of strength. Preparing these protocols in advance will pay dividends going forward.

****And then there is data. We often tell our clients that good data makes good hedging and we want to instill this in their everyday practice. We stress taking the time to make sure that the protocol for transferring data from their PPE and database of record to the secondary marketing platform is clear and as automated as possible. More importantly, however, is ensuring that the secondary marketing system is interpreting the data correctly. If you can identify process and data errors at the beginning of the process, you can save pain and lost profit later.

****Finally, thorough training should not be overlooked. Ensuring a clear understanding of how the hedging process can demystify a process that often is infused with mystery. We like to have our new clients visit our offices to meet the individuals they will be working with. By taking them away from the day to day distractions of the loan production process, we can help them focus understanding the reporting and system functionality that they will be using to help boost profits moving forward.

****The same philosophy applies to a company that is experienced with selling mandatory but transitioning to a new system. Making sure that they understand how to map in their investor pricing structures and price caps appropriately will pave the way to more efficient loan allocation decisions.

****From time to time we run into companies that look at current spreads and delay the transition to the mandatory strategy. In many such cases, when the opportunity arises in the form of wider spreads, they are unable to react fast enough to get a mandatory strategy in place. The reality is that if you take the time to prepare and make the transitions, you will be prepared to take advantage of the favorable market conditions when they arise.

****Preparation is the central theme. Whether it is holding the hand of a client crossing over to a mandatory platform or enabling a company to boost profitability by using an automated best execution and loan allocation platform, there is no substitute for preparing thoroughly so that when opportunity calls, answering the bell is secondary nature.

Don Brown is the Co-President and founder of Secondary Interactive, bringing more than 20 years of business and legal experience to the company. Don pioneered SI’s risk management practice with a vision for leveraging technology to make mortgage and business processes more efficient and more profitable. Don is a frequent speaker at industry event on subjects ranging from hedging strategy, best execution and loan allocation practice, servicing retention strategies and increasing secondary marketing operational efficiency.

The Secondary Desk: A Paradigm Shift

*Navigating A Changing Market*
**By Ivan Darius**

***The mortgage industry is undergoing a vast and dramatic shift. It’s more than regulations or investor relations; we are looking at an actual shift in the paradigm of how the mortgage product is assembled. While process management still plays an important role, we are seeing a fundamental shift towards more active management and more intense verification of data.

****Most existing “Database-of-Record” systems are not designed for this paradigm; instead they are primarily used to capture the data. But it’s not good enough to just have static, end result, data. Particularly for compliance, mortgage bankers need to understand where the information came from, what the context was when it was collected, and how it might be needed in the future. Of course, if we can all agree that data quality is the key, the questions center around when and how the data is validated. Do a simple Google search on loan data quality and more than 20 million hits are returned, most of them from vendors promoting loan quality. And what is technology’s role?

****Reading some of the articles, it’s clear that most of what is written is based on the perception of how a mortgage is underwritten and processed. In reality, it’s more about the workflow, access to information in the form of data, open systems, seamless unification of platforms, and Software-as-a-Service, or cloud-based environments that promote greater agility to be able to assemble and validate information in an automated fashion. It’s also about drawing a line between the origination process and data quality. Origination focuses on gathering facts about the consumer and the collateral, processing the data, and efficiency. Data quality and validation is (should be) done in parallel. Working symbiotically with the LOS, constructing and validating the mortgage product and loan level information in a separate system or process, that can then be merged with information in the “Database-of-Record”, ensuring a validated loan file that has minimal repurchase and compliance risk.

****For lenders, it makes sense for that parallel system to be an adaptive product-eligibility, pricing and secondary marketing automation platform. In the last few years these systems have evolved from core pricing and eligibility engines, to a much more complex platform. In the early days of PPE’s, it was a loan officer product and search tool that included basic automation of the locking process. Today, the workflow has matured adding things like automated underwriting, mandatory delivery, hedging and loan committing, consumer point of sale, investor credit overlays, etc – all things that have significantly enhanced the origination and lender workflow functionality. This information is so fundamental to creating a mortgage that it needs to be accessible from the consumer to capital markets and any point in the workflow between. By continually validating the loan level data throughout these steps, a lender is ensured that the output is a higher quality and compliant loan. Investor credit overlays are a good example. All of the above allows lenders to manage risk from the standpoint of both origination and capital markets.

****As the mortgage process evolves, and compliance grows in scope and importance, it is imperative that the industry evaluates how the market is changing and adjusts accordingly. Today, alongside LOS and servicing systems, product, pricing and secondary marketing automation platforms are equally, if not more, relevant. In the proper implementation, these platforms work hand-in-hand, creating a workflow designed to support the industry’s move towards data verification and compliance.

ABOUT THE AUTHOR: Ivan H. Darius, Ph.D. is co-founder and co-CEO of Plano, Texas-based Optimal Blue LLC, an Application Service Provider (ASP) for product eligibility and pricing engine (PPE) technology and content management. Dr. Darius founded Optimal Blue in 2002 with more than 30 years of executive experience in technology, product development and operations. In his current position, he is responsible for managing the day-to-day activities of the company as well as focusing on the technical and strategic product direction. He designed the Optimal Blue system to leverage the convergence of technology with content management to seamlessly connect investors, lenders and originators to more efficiently source, manage, price and lock a loan in real time. Prior to founding Optimal Blue, Dr. Darius was president and CEO of Sollen Technologies LLC in Dallas. While there, Sollen became the first successful ASP selling automation and process improvement tools to the mortgage industry.

Market Analysis: Figuring Out Ellie Mae

*What Can We Learn From Ellie Mae?*
**By Tony Garritano**

***What can we learn from Ellie Mae? First, that an origination technology player can go public. I think that’s a good thing for other origination vendors. It sets a good standard to follow. Some criticize Ellie Mae’s revenue, but times are trying. In the end, Ellie Mae’s total revenue for the third quarter of 2011 increased 23% to $14.7 million, compared to $11.9 million in the third quarter of 2010. Software Solutions revenue increased 30% to $11.8 million, compared to $9.1 million in the third quarter of 2010. Network revenue was $2.8 million, compared to $2.8 million in the third quarter of 2010. But Ellie Mae’s financial reporting tells me something else about the mortgage space that goes beyond just Ellie Mae. Here’s what I mean:

****First, let’s get through the numbers. Ellie Mae reported that net income for the third quarter of 2011 was $1.0 million, or $0.05 per diluted share, compared to net income of $1.8 million, or $0.10 per diluted share, in the third quarter of 2010. Included in the results for the third quarter of 2011 was $0.4 million of one-time expenses related to the acquisition of Del Mar Datatrac. Included in net income and adjusted net income for the third quarter and nine months ended September 30, 2011, was a one-time tax benefit of $266,000 which resulted from a refund of prior years’ R&D tax credits.

****On a non-GAAP basis, adjusted net income for the third quarter of 2011 was $2.0 million, or $0.09 per diluted share, compared to adjusted net income of $2.2 million, or $0.13 per diluted share, in the third quarter of 2010. Adjusted EBITDA for the third quarter of 2011 was $2.3 million compared to adjusted EBITDA of $2.5 million for the third quarter of 2010.

****Total revenue for the nine months ended September 30, 2011 increased 20% to $36.7 million, compared to $30.6 million for the nine months ended September 30, 2010.  Software Solutions revenue for the nine months ended September 30, 2011 increased 24% to $29.5 million, compared to $23.8 million for the nine months ended September 30, 2010. Network revenue for the nine months ended September 30, 2011 increased 8% to $7.3 million, compared to $6.8 million for the nine months ended September 30, 2010.

****Net income for the nine months ended September 30, 2011 was $0.2 million, or $0.01 per diluted share, compared to net loss of $(1.1) million, or $(0.33) per diluted share (($0.07) per pro forma diluted share including the conversion of 11.8 million shares of convertible preferred stock in connection with the IPO), for the nine months ended September 30, 2010.

****On a non-GAAP basis, adjusted net income for the nine months ended September 30, 2011 was $2.1 million, or $0.11 per diluted share, compared to adjusted net income of $0.7 million, or $0.04 per diluted share, for the nine months ended September 30, 2010. Adjusted EBITDA for the nine months ended September 30, 2011 was $3.2 million, compared to adjusted EBITDA of $1.9 million for the nine months ended September 30, 2010.

****Ellie Mae says the key operating metrics as of and for the quarter ended September 30, 2011, excluding the Del Mar Datatrac acquisition:

****>> The number of lender users actively using the company’s Encompass enterprise solution (“active lender users”) increased 10% year over year to 43,183;

****>> Of all active lender users, 20,349 or 47%, were using the SaaS version of Encompass, an increase of 78% year over year;

****>> Of all active SaaS lender users, 16,196, or 80%, subscribed to the company’s bundled success-based-pricing model (SBP), representing a 139% increase year over year;

****>> 4,050 SaaS SBP users were sold, or booked, during the quarter, including 1,910 new users and 2,140 conversions of existing licensed Encompass users to the SBP model;

****>> Lender Encompass revenue for the third quarter of 2011 increased 27% to $12.1 million as compared to the third quarter of 2010; and

****>> Average revenue per active lender user in the third quarter of 2011 increased 12% over the comparable period in 2010 to $286.

****Certainly reporting on their income and revenue is a story, but that’s not the whole story. For me, the fact that the company continues to report big gains in the area of Software as a Service and that the SaaS clients are taking advantage of bundled services is the real story. This means that lenders want flexibility. They want to be in charge of their own destiny. The more vendors realize and deliver of this trend, the better off their lender clients and the mortgage industry will be.

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.

Market Analysis: The Power Of The Web

*The Web/Client Server Debate is Settled*
**By Tony Garritano**

***I remember the days when we debated about client server technology vs. Web-based technology. The consensus was that mortgage lenders would never embrace the Web. Boy were those industry experts wrong. The Web is everywhere and lenders are increasingly turning to Web-based tools. Vendors are turning to the Web more and more, too. For example, CoreLogic has launched HomeStandingson RE/MAX Mainstreet, a members-only extranet website exclusive to the RE/MAX organization, including RE/MAX Affiliates, RE/MAX Employees and RE/MAX Approved Suppliers. The HomeStandings report provides property specific, easy-to-understand, professional-grade data and analytics that enable RE/MAX Agents to accurately assess the overall purchase quality of a home. HomeStandings combines property, neighborhood and market characteristics to provide a complete local understanding of a home’s value, marketability and rent potential and is available for virtually every property in the United States. Additional data taken into consideration include area pricing, surrounding market conditions, crime rates, schools, estimated market rent and investment opportunities.

****“RE/MAX is pleased to work with CoreLogic to provide our agents with detailed property data that produces a significant competitive advantage,” said Mike Ryan, executive vice president, RE/MAX Global Communications and Branding. “Home buyers and sellers are always anxious to understand the true value of their home, and increasing numbers of investors will appreciate this information in analyzing the specifics of their real estate investments.”

****RE/MAX Agents gain a greater competitive advantage with insight into the complex mix of property, neighborhood and market trends that drive property values, rental prices and market potential. Agents will provide further value to buyers, sellers and investors with essential data to help manage risk, decide whether to sell or rent properties, and perform due diligence prior to buying properties or distressed asset pools.

****Use of the HomeStandings report also has a unique component that can help agents quickly identify potentially profitable foreclosed properties that are eligible for resale based on the grade generated by the report for each property. To confirm this capability of HomeStandings, CoreLogic reviewed more than 115,000 properties that were sold as foreclosures and then resold within six months. The study revealed that properties that earned an A grade with HomeStandings had a resale profit averaging $81,000 higher than those with D and F grades.

****“HomeStandings is recognized as an important, relevant property research tool and has already delivered more than two million reports for three of the largest mortgage companies in the nation,” said H. Harper Thorpe, vice president of Real Estate Solutions at CoreLogic. “While limited information is available on consumer websites, stakeholders with real dollars on the line rely upon the increased comprehensive and accurate information brought together by CoreLogic.”

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.

Understanding The News: Are You Safe?

*Are You Prepared For Cyber Threats?*
**Cyber Crimes Are On The Rise**

***The threat posed by cyber criminals has become an increasingly real and growing concern in mortgage lending, and one that has attracted the attention of Congress, as evidenced by recent hearings by subcommittees of the House Committee on Financial Services. Fighting cyber crime is becoming a priority for more parties than ever before, from the Department of Homeland Security to private firms and insurance companies. As former Homeland Security Secretary Michael Chertoff recently said, “People often ask how much of a threat this is. It’s not a threat – it’s actually happening.” Chertoff’s consulting firm says cyber criminals cause over $100 billion in mayhem per year worldwide, and some believe it has exceeded drug trafficking in dollar volume. Here’s how you deal with these criminals:

****As a line of defense to protect its clients against loss caused by cyber crimes, mortgage loan origination software maker Mortgage Builder has carried “cyber liability insurance” (CLI) coverage for the last three years, well before the issue became public knowledge. It also has completed a SSAE 16 Type II audit. “We do not consider cyber liability insurance coverage to be just an option,” says Mortgage Builder Founder and CEO Keven Smith, “It’s a necessity. Cyber criminals have become more sophisticated as the amount of information available in cloud computing environments has grown. It is our responsibility to protect the sensitive information with which we are entrusted by both clients and borrowers.”

****A report by the Ponemon Institute, a U.S. based information security policy research center, states that the median cost of cyber crime increased by 56 percent over the last year and now costs companies an average of $6 million per year. (Source: Second Annual Cost of Cyber Crime Study, Ponemon Institute, August 2011). The information came from a self-report survey of 50 U.S. based businesses, and the company notes that many companies decline to report cyber crimes, implying the problem is actually far greater than previously thought.

****Bill Mitchell, Mortgage Builder’s vice president and national sales manager, notes that cyber liability insurance is not required for LOS providers, partially because the issue surfaced in earnest only in the last year. But more lenders, particularly the community banks that make up 70 percent of Mortgage Builder’s prospective clients, have become keenly interested in cyber crime protection. “A top-25 community bank that recently became a client found in their due diligence that many LOS providers lacked cyber liability insurance coverage,” he says. “It is rapidly becoming a requirement in RFPs (Requests for Proposals) among lenders when considering new loan origination software solutions.” Mortgage Builder carries the maximum policy available, Mitchell says, which includes coverage to $2 million per claim, but notes that higher limits may be available for lenders seeking supplemental coverage through their own providers.

****Mortgage Builder also sees a successful SSAE 16 Type II audit as an essential security safeguard, indicating that the American Institute of Certified Public Accountants has tested the organization’s ability to protect sensitive business data. This new audit designation replaces the SAS 70 Type II audit that represented the industry’s top audit designation up until this year. “This is another protection against information theft that is not required for LOS companies,” Mitchell states. “It involves on-site physical verifications of security measures, control objectives and activities by an approved, independent auditor. We recently passed our ninth consecutive audit with flying colors, and we are seeing more clients who appreciate the commitment it represents to safeguarding their information,” he says.

****“We hope for the best but we plan for the worst,” Keven Smith says. “Staying ahead of the requirements and keeping clients as protected as possible from cyber crime is our preferred method of doing business.”

Powering Today’s Lenders: Are You Missing Out?

*Are You Happy With Your LOS?*
**By Daniel Liggett**

***Is your LOS doing everything it should for you? An LOS should address the entire loan origination process…and then some!

****Lenders today are tasked with doing more with less.  More rules and regulations, changing investor guidelines, tighter underwriting standards, and the constant pressure to bring in more business, all while having less staff to accomplish stated goals.  It’s clear that the requirements of lenders have significantly expanded  in terms of the scope of tasks that need to be performed to be competitive and successful. These now include both lending and non-traditional tasks that are required.

****First, it goes without saying that your LOS should be able to handle mortgage loans of all kinds from all of the traditional channels. But it should also be able to handle consumer lending products such as personal loans, auto loans, equity and lines of credit, and construction lending products as well. It should use the same database and take advantage of the same security, data validation and related tools to maximize efficiency and eliminate the need for your staff to learn multiple system and infrastructures.

****Your LOS should also handle doc prep, secure messaging and doc delivery as well as the traditional tasks. Most importantly, your system must have in-depth integrations with business partners to help perform these tasks. Integrations allow you to offer clients faster service, decrease manual requirements and increase the quality of the information flowing in and out of your LOS. Simply put, the right LOS integration makes your operation better, stronger, and faster!

****Lastly, your LOS must perform non-traditional tasks such as assisting with marketing and customer retention. Your LOS should help you attract new customers with fast and easy point-of-sale features, instant approval messages and instant loan status updates. It should also serve as a repository of data on current customers so that you can quickly and easily reach out to them with offers on other products, or re-finance opportunities, before your competition does.  Today your technology solution must reach beyond the traditional definition of an LOS and include:

****>> Consumer facing web portal for quick, secure applications w/ real time status updates to the borrower

****>> Dynamic point-of-sale functionality

****>> Secure document delivery

****>> Secure messaging

****>> Processing

****>> Underwriting

****>> Closing

****>> Document Preparation

****>> Custom documents & letters

****>> Mortgage processing

****>> Consumer processing

****>> HELOC processing

****>> Construction Loan Processing

****>> Integration with banks business partners

****>> Ability to quickly and compliantly respond to rule changes

****To effectively respond to the challenging lending environment that lenders are faced with today, lenders need to turn to technology to answer the call.

Daniel Liggett serves as Director of Client Services for Associated Software Consultants’ PowerLender Loan Origination & Processing System. He has more than 20 years experience in mortgage lending and loan automation systems. Danny oversees the configuration, training, support and project management efforts for loan origination and secondary marketing at ASC and serves as a development and marketing advisor.

Market Analysis: A Gift For Servicers

*Tackling The Single Point Of Contact Rule*
**By Tony Garritano**

***Servicers are plagued with, among other things, dealing with the new single point of contact rule. The good news for servicers, and mortgage professionals in general, is that vendors always catch on to provide solutions. In this case a lot of vendors have sought to solve this issue. For example, eMASON, Inc., developer of the Clarifirebusiness process automation software for the financial servicers industry, has unveiled the Clarifire Community. The new Clarifire feature, it says, enables the nation’s largest servicers to drive compliance with Department of the Treasury regulations, while delivering a solution to borrowers—and all others involved in mortgage servicing—that provides real-time access to borrower delinquency management processes. Clarifire Community is the portal through which borrowers, servicers, investors, title agents, realtors, regulators and other mortgage industry players can come together in one platform to synchronize activities relating to mortgage loans.

****Recently the Treasury Department has required lenders and mortgage servicers to provide a “single point of contact” for borrowers who need help understanding the array of loss mitigation options available to them. Moreover, those servicers are now required to maintain detailed records (with audit trails) of their interactions with borrowers. eMASON’s Clarifire Community meets both directives in a single point of access in a secure private cloud environment.

****With Clarifire Community, borrowers access their single point of contact with just one click. Banks and servicers often have over a dozen customer points of entry. With Clarifire Community, this is consolidated into one solution. A live chat feature, Clarifier Concierge, expedites the flow of information borrowers need. Clarifire automates the business processes that touch the mortgage loan, each to servicer specifications, while providing an action or contact trail that is both accountable and auditable. The various workflows and user interactions involved in delinquency management now happen in one place, in a secure, easy to use, intuitive platform.

****In addition to its auditable single point of contact features, Clarifire Community generates documents, such as borrower final workout agreements, and delivers them through a secure Internet connection. Messages are delivered instantly to borrowers, telling them that the documents are ready in the communication method of their choice…email or text.

****“Clarifire Community lets servicers deal accurately and efficiently with the volume of work they see today and are likely to continue to see in the future,” said Jane Mason, founder and CEO of eMASON. “The technology also gives borrowers a voice by letting them be informed participants in the process, which is what our regulators want to see. Technology is the heart of the solution.”

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.

Default Management: Innovation At Work: REO Fixes

*Localization: Key to Better REO Outcomes*
**By Joseph Badalamenti**

***Elevated numbers of foreclosed properties are placing lenders under significant pressure to reduce ballooning REO inventories, while minimizing portfolio losses. In these extreme market conditions, it has become increasingly difficult to sustain property-specific marketing strategies. Time constraints and sheer numbers tend to reduce the focus on individual properties in favor of volume-driven approaches. Ironically, the resulting one-size-fits-all solutions have often had the opposite of their desired effect, leading to longer disposition cycles and lower selling prices.

****Strength Where it Matters

****To improve results, stronger field execution is paramount. Servicers need to look for an REO asset manager with a nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties. This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

****A nationwide network that includes both brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient, effective approach for each asset in the lender’s REO inventory.

****End-to-End Control

****Servicers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

****>> Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

****>> Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process –  is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

****>> Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

****>> Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turnkey auction management or assigning a broker, as appropriate.

****>> Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most important, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

****>> Closing Services – Well-qualified REO  asset management organizations can provide the people and expertise to  coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information ? all in strict accordance with client, legal and regulatory requirements. Title procurement, HUD-1 review and approval, escrow/closing coordination ? these capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

Joseph Badalamenti (Joe Bada) got his start in the default management industry in 1967 as a HUD contractor. Now, 43 years and over 5 million inspections later, Joe has built Five Brothers into a highly successful and respected industry leader offering a full range of default management services and technology solutions. His strong belief in client-centered partnering has spawned a nationwide network of highly effective customer and field service professionals. Advanced technology solutions created under his leadership the industry’s first web-based workflow management system, FiveOnline, a complete document management and processing system (MARS), state-of-the-art loss mitigation software (MOTZ), which allows quick and efficient loan modifications according to FDIC and HAMP guidelines, automated document storage/workflow management software (IntelliStorage) and HUD claims processing system (ClaimSys). Joe remains an advocate of client-specific business solutions, an approach he believes is Five Brothers’ most important competitive advantage.

Market Analysis: Give Back

*Let’s Lend A Hand*
**By Tony Garritano**

***My great friend Roger Gudobba lives to golf. In fact, most people in the mortgage space love to golf. I always say that once they add a miniature golf component to mortgage outings, I’m in, but until that happens my skills when it comes to real golfing are lacking. My friends will attest to this fact. So, why am I talking about golf today? I just got an announcement about a company that has combined golf with charity, and those of you that read this column regularly know, I love to talk about companies giving back. In this case The Carrington Charitable Foundation (CCF) announced today that its Inaugural Golf Classic was a tremendous success, raising $350,000 to benefit the Veterans Airlift Command. Funds raised through this event will support the administrative functions required to coordinate the efforts of the VAC volunteer pilot network, which includes arranging free air transportation for Veterans of Iraqi Freedom and Enduring Freedom (Afghanistan) for medical and other compassionate purposes.

****The VAC aids wounded warriors dealing with devastating injuries and long-term hospitalization in facilities that may be hundreds of miles away from their families by providing free air transportation, donated by a national network of private aircraft owners, for the Veterans and their families.

****“This event was truly a milestone for the VAC,” said Walt Fricke, Founder/AirBoss of the Veterans Airlift Command. “The partnership with the Carrington Charitable Foundation brought a whole new group of friends together, allowing them to see and hear first-hand how extraordinarily difficult routine air transportation can be for wounded warriors, and what a wonderful experience these veterans and their families have when they are instead transported in private aircraft. Without the financial support like that of the sponsors and attendees of this event, the Veterans Airlift Command could not exist.”

****Carrington Holding Co., through its subsidiary Peregrine Jet, has been donating flights to the VAC for the past four years, contributing flight services, fuel, insurance and crew. Eager to further support the VAC in its mission to connect veterans and their families, the Carrington Charitable Foundation chose to hold its Inaugural Golf Classic to raise funds for the organization. Over 97% of total in-kind donations and funds raised by the VAC throughout the year go directly to the cause – only 2.66% are used for administrative purposes.

****“This event was a life changing experience for our employees and guests who had the opportunity to hear the stories of our injured veterans and interact with them throughout the weekend,” said Bruce Rose, CEO and Founder of Carrington Holding Company. “We believe very strongly in the Veterans Airlift Command and the work they do to unite troops with their families, and are pleased that our golf tournament could raise awareness for the VAC mission and provide funds to further the crucial work they are doing for our wounded warriors.”

****Over 100 companies and individuals participated as event sponsors.

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.

Understanding The News: Credit Unions and Community Banks Search For Answers

*Don’t Credit Unions and Community Banks Deserve Help, Too?*
**Talking Loan Quality**

***As more community banks and credit unions beef up their mortgage presence, they need help. Mortgage isn’t their specialty and with all the new rules and regulations, it’s not easy. As a result, we are seeing new technology tools hit the market specifically designed to help this group. For example, PROGRESS in Lending has learned that Aklero Risk Analytics, a provider of automated data and document validity assurance, has unveiled DQx Scan, designed to meet the quality control needs of small lenders; particularly, community banks and credit unions.

****“The aim is to provide these financial institutions with the same quality control capabilities that we provide to the largest lenders and investors,” said Brian K. Fitzpatrick. “They want fast, efficient, high-quality services and that’s what DQx Scan delivers to them.”

****The lender scans the loan documents, names the file, hits send and delivers the documents securely to Aklero, which classifies the documents and extracts critical loan data. An automated deficiency detection analysis is performed on both the documents and the data, before performing the most comprehensive and accurate quality control audit in the industry. In addition, Aklero will provide the scanner to the client.

****“With DQx Scan files never leave the lender’s premises, the files go securely into our platform to begin the classification of loan files, extraction and validation of key data elements, a process that is completed within 24 hours,” said Fitzpatrick. ”Depending on the needs of the lender, Aklero can perform quality control for specific functions such as pre-closing or at any point in the mortgage life cycle.”

****If the lender does not have their files previously scanned, DQx Scan eliminates the hassle of delivering loan files for audit. The solution reduces the time that the quality control process requires, saves money, and provides the most accurate and detailed quality control in the industry, because it validates data from source systems to the data contained in the documents, in a highly automated fashion.

****“These smaller institutions had few options for quickly delivering loan files for audit until now,” said Fitzpatrick. “DQx Scan ensures that smaller institutions will be able to eliminate the security issues and time consumption concerns with delivering loan files for audit.”