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Data Security – What Every Mortgage Professional Needs To Know

Download Your Free PDF Copy of “Data Security – What Every Mortgage Professional Needs to Know” – Including Helpful Resources, Links, and Examples

By John Paasonen, CEO of Maxwell & Ken Kantzer, Co-Founder PKC Security

Mention data security to a mortgage executive and it’s enough to make them squirm. You can’t open a newspaper without reading about a security breach, even from some of the world’s most avantgarde technology companies.

Data is the heartbeat of the mortgage industry. Protecting it should be the priority for all organizations, no matter their size. And it’s time to size up to the reality that the conventional methods of security are no longer sufficient.

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Ken Kantzer knows a bit about data security. He is the co-founder of PKC Security, a cybersecurity consulting firm. He has undertaken cybersecurity consulting and code audit efforts across multiple sectors: high-tech startups, financial services, oil & gas, industrial infrastructure, and high-security government systems.

Reduce Fractured Business Architecture

The way most mortgage companies work is fractured and insecure. Data resides on systems from the loan officer’s messaging app on their smartphone through to the LOS and everywhere in between. Data sits in Word documents. It lives in Outlook. And it’s transferred to third parties as part of the process every day.

Despite marketing promises to the contrary, there is no single all-in-one platform today. Indeed that may be an unrealistic utopia. What is realistic is a set of best-of-breed, modern systems that work together seamlessly.

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“The best way to get hacked is to have systems on your hands that no one at your company understands,” says Ken. “Given the choice, opt for platforms that employ the most modern security measures, and simple interfaces between your systems.”

Protect Data Dynamically

The conventional castle-and-moat approach to data security is outdated. The financial services industry, particularly the mortgage vertical, must move beyond just firewalls, antivirus, content filtering, and threat detection. “The old idea of putting up a wall and standing watch just doesn’t hold true anymore,” says Ken. “The new approach to data protection focuses on resiliency — systems must ensure that even in worst-case scenarios where there is a data breach, the data can be rendered useless.”

Encryption is one such example of this approach. Mortgage companies can maintain control of their data, even when it is deployed in the cloud or in their data center. By moving security controls as close as possible to the data, a mortgage company can ensure that even after the perimeter is breached, the information remains secure. “At PKC, we always look at how cloud services use encryption, and how the encryption keys used by the service are protected. When encryption is properly implemented, it can be a huge help in strengthening the security of a service, but when it’s improperly implemented, it can actually hurt, by lulling users into a false sense of security.”

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If you haven’t been breached yet, you’re either lucky or you don’t even know it happened. Only mortgage companies that adopt a combination of password managers, encryption-at-rest (using tools like BitLocker or FileVault), and two-factor authentication can be confident that data is useless should it fall into unauthorized hands.

Make Sales & I.T. Collaborate

Hopefully you do the basics: security awareness training, security policies that are enforced across the organization, and a consistent process of monitoring and reviews. Although these are necessary, they often feel like shackles for the sales team.

As many CIO’s realize, employees are often the weakest link. “The key to security is not a sexy new kind of technology, it’s not machine or deep learning,” says Ken. “Of all the awesome technology to deploy to catch bad things before they happen, it’s your frontline employees that will have the highest rates of detection.”

When IT team and sales collaborate, it is the opportunity to confer the feeling that owning security is their responsibility. The key to security is getting every person to care about it, to set a shared value that we must “protect our house” both at home and in the office.

Rather than IT attempting to shackle sales, have them arm the sales team with market-leading mobile communication and collaboration tools that solve their problems, make them more productive and are, by their very nature, secure.

Finally, use the best technology has to offer to reduce non-selling administrative or customer service aspects of a loan officer’s role. Too often, those activities take up more time than the selling loans, and sadly are often created by poorly designed technology tools themselves. Ken agrees: “A mortgage company that understands how to minimize the amount of time a loan officer and her team spends doing administrative tasks, such as data entry and chasing borrowers for documents, will win by helping them be more productive.”

Hack Yourself

It sounds counterintuitive if not downright scary: invite hackers to analyze your systems, looking for security holes, and pay out a “bounty” when they find them. But PayPal, Western Union, Square, Simple and other financial services companies that have created or worked with so-called bug bounty programs say they’re an effective supplement for the work done by sometimes-strapped internal security folks.

Outside the industry, it’s become a common-enough practice that even the U.S. government launched a “Hack the Pentagon” program. Hackers have already found 100 vulnerabilities in Department of Defense systems and the program has paid out $15,000 to 1,400 participants.

Pay hackers to take your side and work with you, and avoid the legal, privacy, intellectual property and cyberfraud issues that result when they go it alone.

Companies that have been using bug bounty programs for years see only benefit to them. Along with the many other types of security defenses mortgage companies need, offering a bug bounty, or undergoing a quarterly penetration test, is likely to become a best practice in the industry.

Empower Your Customers

Two in three customers said they’d cease doing business with a company that experienced a breach where financial information was stolen. Half of the respondents to the global survey by Gemalto said they’d stop doing business with a company where personal information was stolen. A quarter of people said they’d consider legal action against the breached company.

In fact, a mortgage company can even increase customer trust by telling borrowers about the security measures that they have put in place to protect their data. By being open about the efforts they are making with regards to data protection, like encrypting data in transit and at rest, they can be perceived as trusted innovators.

Mortgage companies can take this a step further and, as well as informing customers about what they are doing to protect them, can also tell them what to do in order to protect themselves and become safer users of their services — for example, instructing them not to send sensitive documents by email.

Conclusion

Security must be at the forefront of all decisions made by mortgage professionals. Rather than letting this slow you down or cripple your organization, use security as your asset to grow your business. Have your teams empower each other rather than limit the capabilities of each group. Challenge yourselves regularly.

Technology and proper processes unlock efficiencies and can improve not only the security of your clients information, but your bottom line as well.

About Maxwell

Maxwell is a lightweight digital mortgage platform, helping lending teams become more efficient and provide the digital experience borrowers expect. Maxwell was created on the principle that mortgage companies will win by betting on the augmentation of human ability, not by replacing it with faceless technology. At Maxwell, the power of the human relationship is core to how we build software.

Founded in 2015, Maxwell is a member of the Mortgage Bankers Association and the Colorado Mortgage Lenders Association. In 2017, we were named one of the most innovative companies in real estate by HousingWire Magazine. Every day, our software is used by originators across the U.S. to serve thousands of homebuyers.

Download Your Free PDF Copy of “Data Security – What Every Mortgage Professional Needs to Know” – Including Helpful Resources, Links, and Examples

 

BSI Financial Services Launches New Mobile App for Borrowers

BSI Financial Services, a mortgage-centric financial services company providing mortgage servicing and special servicing, has released a new mobile app that enables borrowers to manage their mortgage loans using tablet and mobile devices. The technology was designed and built in-house by BSI Financial software engineers.

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“Offering borrowers digital access to their loan information affords them greater choice and control in managing their loan obligations,” said Gagan Sharma, president and CEO of BSI Financial. “The functionality available in our mobile application satisfies a growing demand for convenience in financial management while providing us a foundation for future innovation,” he added.

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Using BSI Financial’s mobile app, borrowers can verify loan payments, view transaction history and identify future payment dates and amounts. They can also make one-time or ongoing loan payments using Automated Clearing House (ACH) functionality.

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Requests for loan verification and pay-off statements can be made using the app, with the option of fax or postal mail delivery.

Borrowers in default can monitor events and milestones in the loss mitigation process and communicate with their BSI Financial representative.

“These real-time capabilities enable us to resolve loans in loss mitigation faster than traditional phone-and-mail processes,” explained Sharma.

Integration Furthers Digital Construction Lending

Built, a provider of secure, cloud-based construction lending software, is being integrated with Black Knight’s LoanSphere platform. Black Knight is a provider of integrated software, data and analytics solutions that facilitate and automate many of the business processes across the homeownership lifecycle. The Built integration will provide digital management on any construction loan using loan data from Black Knight’s two core LoanSphere systems: the LoanSphere Empower loan origination system and the LoanSphere MSP servicing system.

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Demand for construction loans has increased with owner-occupied products and renovation markets poised for continued growth. In the past, the administrative burdens of construction loans have been a significant barrier for many lenders because of the manual processes required for spreadsheets, phone calls, email threads and other loan-related communications. With the integration between Black Knight and Built, any construction loan can be digitally managed throughout the loan life cycle – from origination through servicing.

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“We are excited to add Black Knight to our Strategic Alliance Network. Both Empower and MSP are industry-leading enterprise solutions, and this integration will provide a complete, seamless experience from loan origination through construction,” said Built President and CEO Chase Gilbert. “As construction lending heats up across the country, the timing of this integration couldn’t be better for the industry.”

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LoanSphere is Black Knight’s end-to-end platform of integrated software, data and analytics supporting the entire mortgage and home equity loan lifecycle – from origination to servicing to default. The platform delivers business process automation, workflow, rules, and integrated data throughout the loan process, providing a better user experience, cost savings and support for changing regulatory requirements.

“Both lenders and servicers will benefit greatly from Built’s integration with LoanSphere, which connects lending functions and data to help clients reduce risk, improve efficiency, and drive financial performance,” said Black Knight President Joe Nackashi. “Built’s technology complements these capabilities by offering real-time data access to improve the overall experience between mortgage professionals, builders and their borrowers.”

Refinances Remain Ready Among Millennials

Refinances among Millennial borrowers regained their popularity in the fourth quarter of 2017, according to the latest Ellie Mae Millennial Tracker. December was the third straight month refinances accounted for 15 percent of all closed loans for Millennial borrowers – the highest percentage of refinances for this demographic since February 2017’s annual high of 17 percent. The percentage of closed purchase loans remained at 84 percent, decreasing from June 2017’s peak of 90 percent.

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Specifically, the percentage of Conventional refinances remained at 19 percent, holding steady since October, while FHA refinance loans stayed at six percent from the month prior. The percentage of Conventional purchase and FHA purchase loans also remained the same from November to December at 80 and 94 percent, respectively.

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“With seasonality and low inventory levels at the end of the year, Millennial borrowers continued to take advantage of refinance options during the fourth quarter,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “Many may have been driven by a desire to take advantage of low interest rates given uncertainty about potential rate hikes in the new year.”

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Other statistics of note for Millennial borrowers in December included:

>>The average 30-year note increased slightly from 4.18 in November to 4.22 in December, still lower than 2017’s highest monthly average of 4.34 in April.

>>The average time to close all loans held at 44 days in December.

>>Average time to close a refinance held at 45 days, while the time to close a purchase also remained flat at 42 days, the same since June 2017.

>>Average FICO scores for all closed loans fell one point from the month prior to 722.

The top Metropolitan Statistical Areas (MSAs) for Millennials by percentage of mortgage loans closed in December included Casper, Wyo. (71 percent), Williston, N.D. (63 percent), as well as Victoria, Texas and Mount Pleasant, Mich. (both 61 percent).

The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a robust sampling of approximately 80 percent of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass mortgage management solution. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type.

Integration Streamlines Operations

US Real Estate Services, Inc. (USRES), a provider of REO asset management, default ancillary services, and valuation solutions nationwide it is now integrated to LendingQB’s cloud-based loan origination solution (LOS) to further expand its reach and enhance the customer experience for the appraisal management service line. These enhancements position USRES for continued growth, enabling the company to expand its presence and services within the mortgage industry.

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Keith Guenther, CEO of USRES, said, “LendingQB is a prominent player in the LOS space and therefore made our decision to partner with them an easy one. Their continued focus on integrating with the industry’s most innovative and proven providers has resulted in a platform that is comprehensive, yet intuitive. These tools and services will be instrumental as we continue to expand our presence and maintain efficient, streamlined operations.”

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With this integration, USRES can now more effectively engage Lending QB’s customers in a single, centralized environment. In addition to originating mortgages, the platform seamlessly integrates with hundreds of leading industry applications, including document preparation, compliance, mortgage insurance and title services. This addition to USRES’ set of tools and offerings further cements their commitment to providing the best, most transparent experience in the AMC space.

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“USRES is a company that is committed to establishing lasting relationships with customers and business partners, and we share those same values,” said Tim Nguyen, president of LendingQB. “Lenders want to access services from innovative vendors such as USRES in a way that improves the overall loan origination process. Using our API framework, we were able to provide USRES with an integration experience that enhances the way that lenders interact with their valuation services. We look forward to working with the USRES team and providing our mutual customers with a superior solution that helps us all be successful.”

Springhouse Receives MOR RV2 Residential Vendor Ranking

Springhouse has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive. Founded in 2009, Springhouse is a full-service valuation solutions and appraisal management company. Springhouse provides property valuation and appraisal services in all 50 states and five major territories in the United States.

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As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services. With Altisource’s extensive and diversified product solutions for the real estate industry, Springhouse clients are provided the opportunity to consolidate services with a single full-service vendor.

The Morningstar ranking is based on a variety of factors, including:

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>>Springhouse has an effective corporate governance program that monitors the company’s compliance with appraisal independence requirements and the customary and reasonable fee provisions contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The compliance area also ensures that the appropriate state licenses are in place and current. The company continues to obtain an SSAE No. 16 (Reporting on Controls at a Service Organization) SOC 1 report annually.

>>Springhouse has strong vendor-selection criteria and vendor-rating standards that effectively measure vendor performance, as reflected in the execution of service-level agreements with its customers.

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>>Quality control standards are embedded in Springhouse’s proprietary and third-party technology, ensuring that work orders received from vendors are thoroughly reviewed and that clients receive a quick report turnaround time and low revision rate.

>>Springhouse benefits from a solid technology environment, a well-defined project management process, effective network security protocols, and a disaster recovery and business continuity plan that leverages the company’s geographically diverse office locations for built-in redundancy.

Springhouse has completed more than 570,000 valuations since 2012 using its nationwide vendor panel of more than 24,000 brokers and appraisers. In addition to a full suite of appraisal and BPO solutions, the company provides innovative and alternative valuation products for use in originations, servicing and capital markets. Springhouse is focused on sustained growth initiatives, entering 2018 with a new sales and management team in place and anticipates several new products and services to be announced in the coming year.

MCT Bolsters Its Presence With New CMO

Mortgage Capital Trading, Inc. (MCT), a mortgage hedge advisory and secondary marketing software firm, announced that Ian Miller has joined the company as Chief Marketing Officer (CMO). In this newly created position, he is responsible for ensuring that MCT’s marketing strategy effectively supports the company’s business plan and helps drive growth.

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MCT has traditionally been known in the mortgage industry as a pipeline hedge firm but over the years has developed into a fully-integrated provider of capital markets services and software. Mr. Miller is charged with developing and executing MCT’s marketing plan and strategic initiatives.  Since joining MCT, he has made significant strides in honing the company’s messaging, positioning, branding and creating positive industry awareness for MCT’s value proposition and extensive suite of secondary marketing focused products and services.

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“We are elated to have been able to recruit Ian to join the MCT team and head the marketing strategy,” said Curtis Richins, president of MCT. “We’ve grown our business considerably over the past several years and had a need to ensure that our brand accurately reflects the robust suite of products, services, and technology we now offer within company divisions. Ian has and will continue to play a key role in making sure MCT maintains a strong reputation in the mortgage industry.”

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Before MCT, Mr. Miller served as the Director of Client Services at Riverine, Inc., a full-service digital marketing firm catering to over 50 clients in a wide range of industries and capacities. At Riverine, he worked closely with MCT as a vendor partner where he was instrumental in streamlining the integration of its sales and marketing processes and enhancing the brand.

Prior to Riverine, Mr. Miller was a co-founder and partner at Tower Agency, a digital marketing firm offering end-to-end marketing capabilities. Mr. Miller eventually merged the company with Riverine, growing the client base exponentially. Before that, he was a freelance marketing agent providing professional services to an array of clients.

“Serving as MCT’s marketing provider in recent years, I have been impressed by their culture, dedication to customer service, and continuous innovation,” said Mr. Miller. “I’m grateful for the opportunity to help these qualities reach a wider audience, and support MCT’s growth as the leading provider of capital markets services and software.”

Mr. Miller is a through and through marketing professional who has a proven track record of successful execution with growing brands, capturing market share and increasing revenues. He is well-versed in all aspects of marketing communications ranging from strategic planning, branding, advertising, content marketing, and social media to trade shows, event production, sales support and client communication. He will leverage these competencies, along with support from a team of experienced professionals, to execute on a robust marketing strategy for MCT in 2018 and beyond.

eSign Milestones Continue

DocMagic, Inc., a provider of loan document preparation, regulatory compliance and eMortgage services, announced that it has processed more than 300 million mortgage-related electronic signatures.

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This milestone achievement is the direct result of increased adoption of several DocMagic technologies that feature its eSigning platform, which can be accessed as a software-as-a-service (SaaS) or on-premise enterprise platform. Each of DocMagic’s digital platforms reports a significant increase in volume, which the company attributes to lenders’ growing need to prove a TRID-compliant, 100 percent paperless mortgage process.

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“Borrower demand is driving the increase in eSignings, and lenders are choosing DocMagic to get a consistent, compliant eSigning solution that spans the original LE [Loan Estimate] to the final CD [Closing Disclosure],” said Dominic Iannitti, president and CEO of DocMagic. “Lenders know DocMagic is the go-to choice for compliance. We reached 300 million eSignatures because we have solved lenders’ number one burden for the past two years—electronic evidence of TRID compliance—while enabling them to stay competitive and enhance the overall borrower experience.”

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DocMagic reports significant volume increases for SmartCLOSE and Total eClose, two award-winning technologies that enable lenders to comply with TRID and UCD (Uniform Closing Dataset) guidelines. SmartCLOSE is a collaborative closing portal offering one system of record that assures accuracy, completeness, consistency and compliance of the data before final documents are drawn and the borrower electronically executes the documents using DocMagic’s integrated eSign technology. Total eClose, a complete paperless, digital closing solution with integrated eSignature and eNotarization capability, provides continuous compliance checks to assure all documents are complete, current, consistent and compliant.

“A lot of existing DocMagic customers adopted our eSign technology because it’s so much easier to access and use than other platforms,” said Iannitti. “We were already integrated with the vast majority of LOS systems, so providing eSigning functionality was a logical extension of our service. We also added new integrations, which brought onboard new eSigning customers. Having an eSign technology that can draw new customers while expanding use among existing customers shows the ubiquitous need for the functionality DocMagic’s technology provides.”

Appraisal Logistics Updates AMC ROI Calculator

Appraisal Logistics, a provider of high quality, compliant appraisal management solutions for the residential mortgage industry, announced today that the company has updated its Internal Appraisal Management Cost Calculator to better reflect the expenses lenders can expect to pay to handle the collateral valuation function in house. The tool is designed to help lenders better anticipate the expenses they will incur for handling this work and to calculate the Return on Investment of outsourcing this work to an AMC.

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“It’s very difficult to calculate the true ROI achievable for outsourcing any function if you don’t have a very good idea of what it will cost you to perform the same function in house,” said Frank Danna, CEO of Appraisal Logistics. “We developed this tool to give lenders a view into the internal expenses they will incur should they choose to handle the collateral valuation function internally. Without taking all of these expenses into account, lenders may feel that outsourcing to a particular AMC is generating a return when it is not. At the same time, a more complete view of internal expenses will make comparing potential AMC partners easier.”

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Appraisal Logistics has earned the important ISO 9001:2015 Certification, awarded by LRQA, a Lloyd’s Register Company. Despite this clear differentiator, Danna still feels that lenders must also evaluate potential AMC partners in terms of the ROI they will receive from partnering with them.

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“Lenders should only be working with firms that care enough about their businesses and their customers to invest in third-party certifications to back up their own claims,” Danna said. “That should only be the price of entry for a relationship with the lender. Any outsourcing partner must be capable of demonstrating a clear ROI. Our calculator is free and will allow a lender to evaluate the ROI of any prospective AMC partner.”

Foreclosures At A 12-Year Low

Data from ATTOM Data Solutions shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 676,535 U.S. properties in 2017, down 27 percent from 2016 and down 76 percent from a peak of nearly 2.9 million in 2010 to the lowest level since 2005.

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Those 676,535 properties with foreclosure filings in 2017 represented 0.51 percent of all U.S. housing units, down from 0.70 percent in 2016 and down from a peak of 2.23 percent in 2010 to the lowest level since 2005.

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ATTOM’s year-end foreclosure report is a count of unique properties with a foreclosure filing during the year based on publicly recorded and published foreclosure filings collected in more than 2,500 counties nationwide, with address-level data on more than 23 million foreclosure filings historically also available for license or customized reporting. See full methodology below.

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The report also includes new data for December 2017, when there were 64,651 U.S. properties with foreclosure filings, up 1 percent from the previous month but still down 25 percent from a year ago — the 27th consecutive month with a year-over-year decrease in foreclosure activity.

“Thanks to a housing boom driven primarily by a scarcity of supply, which has helped to limit home purchases to the most highly qualified — and low-risk — borrowers, the U.S. housing market has the luxury of playing a version of foreclosure limbo in which it searches for how low foreclosures can go,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “There are a few notable local market exceptions playing a different version of foreclosure limbo in which a backlog of legacy foreclosure activity left over from the last housing crisis is still winding its way through a labyrinthine foreclosure process, resulting in incongruous jumps in various stages of foreclosure activity in markets such as New York, New Jersey and DC.”