We’re not necessarily looking to break technology news, but we are looking to put it all into greater context for you. Right now we’re hearing:

Understanding The News: Rank Your Appraisers

*Rank Your Appraisals*
**Technology Can Help**

***How would you rank the appraisers that you do business with? Don’t know, let technology help. Platinum Data Solutions, a provider of collateral valuation technologies, has added a qualitative scoring function to its RealView automated collateral review platform. The system now automatically ranks each appraisal with a “low,” “medium” or “high” quality grade, based on the number and type of rule discrepancies found in each report. This at-a-glance scoring structure allows users to quickly and efficiently assign each RealView-analyzed appraisal report to the appropriate appraisal review level, whether a new or highly experienced staff member, in just a matter of moments.

****“With RealView’s qualitative scoring, lenders can make quicker loan decisions, prevent buybacks and reduce turn times,” said Phil Huff, CEO of Platinum Data Solutions. “Our customers can now take a look at a RealView report and know in an instant whether to assign that appraisal to a junior reviewer or someone with expertise in certain types of data evaluation. They can maximize their time and their skilled labor forces without sacrificing the quality of their decisions.”

****An increasing number of appraisal-related guidelines and regulations—along with their potentially costly fees, fines and repurchases—have created the need for lenders, servicers and investors to thoroughly review all appraisals on the loans they originate, service and purchase. Some organizations review each appraisal through manual processes, which can be time consuming and error-prone. However, more companies are using technologies that leverage automation to review appraisals with greater speed and accuracy.

****RealView subjects each report to a comprehensive review that covers over 2,000 USPAP (Universal Standards of Professional Appraisal Practices) and other industry appraisal review guidelines that include appraisal data points, as well as customized user-defined rules throughout all sections of the appraisal report. In contrast, without automation, the internal manual review processes could easily consume 30 minutes or longer. After completing its automated review, RealView provides a listing of discrepancies—potentially inaccurate, erroneous or fraudulent data points—found in the subject appraisal. Discrepancies are categorized into one of three categories: “blank field” discrepancies, which occur when a required field does not contain any information; “compliance-related” issues, where fields contain data that does not comply with USPAP and/or investor guidelines; or “checklist” issues, which indicate fields containing information that conflicts with the user’s specified criteria.

****“There’s no reason that lenders, servicers, investors and AMCs should sacrifice efficiency, cost-effectiveness, service or high quality for attaining compliance—and with RealView, they don’t have to,” said Huff.

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: What Are You Doing With Your REOs?

*What Are You Doing With Your REOs?*
**Fahe Profiled**

***REO Allegiance, a property preservation firm, has been chosen to provide property preservation services to the home finance division of an affordable housing federation dedicated to helping low income families in the Appalachian mountains find and finance affordable housing. JustChoice Lending is the mortgage division of Fahe, an alliance of community leaders creating investment strategies that generate social, environmental, and financial returns. Here’s the scoop:

****REO Allegiance is providing the firm with a full range of foreclosure and rental property services including maintenance, vacant property registration, repairs, inspections and special project support.

****“We’re proud to be working with and supporting the efforts of this important organization,” said Lisa Sadaoui, CEO of REO Allegiance. “Organizations like Fahe and its members are rebuilding this country by purchasing, repairing and repurposing homes for low-income families in underserved areas. We’re happy to lend our experienced property preservation experts to that task.”

****JustChoice Lending offers homeowners a number of financing options and has thus far made more than $18 million in mortgage loans to 225 families in the region since its launch in 2007. It is just one of Fahe’s vehicles for reaching 6,400 families in need every year.

****“Fahe and its members are helping to rebuild local economies by creating jobs building and repairing energy efficient homes” said Fahe President Jim King. “Working with REO Allegiance lets us focus on what we do best and rest assured that our assets are being well managed.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: Beware Of Fraud

*Beware of Mortgage Fraud*
**New Report Highlights Fraud Increases**

***Interthinx has released its annual Mortgage Fraud Risk Report, which highlights some of the most significant mortgage fraud risk trends based on analysis of loan applications processed in 2011 by the Interthinx FraudGUARD system. According to the report, the Employment/Income Fraud Risk Index rose 14 percent during 2011 and has been on an upward trend for more than two years for a total increase of more than 45 percent. The Employment/Income Fraud Risk Index is particularly high for investor loans with an index of 310, which is almost three times the overall index value of 111 and is highest for high-value properties. Here’s what else the research found:

****More detailed points highlighted by Interthinx analysts include the following:

****>> The fraud hot spots for 2011 are very similar to those observed in 2010. The top six states with the highest overall levels of mortgage fraud risk in 2010 were again the riskiest six states in 2011. Mortgage fraud risk remained consistent from 2010 to 2011 in the Metropolitan Statistical Areas (MSAs) as well, with 16 of the 20 riskiest MSAs repeated from the previous year. This alarming degree of persistence suggests that it is going to be a long road back for these MSAs and states. They are all experiencing high levels of foreclosure activity, and the predominant mortgage fraud schemes center on distressed borrowers and properties.

****>> Nevada has the highest mortgage fraud risk in the nation, with a risk index value at 245, which is 99 points higher than the national mortgage fraud risk index of 146. Over the last eight years, Nevada has experienced a cycle of fraud leading to an artificial boom followed by a devastating bust resulting in the largest house price declines, unemployment rates, and foreclosure rates in the nation. High fraud risk, associated in particular with foreclosure and short sale schemes, contributed to Nevada retaining its position as the state with the highest mortgage fraud risk in the country for the third consecutive year.

****>> The entire Chicago MSA saw a dramatic decrease in high-risk transactions in 2011, with its risk index value falling from 174 in the first quarter to 146 in the fourth quarter. Increased media and lender scrutiny of fraud in these geographies may have played a role in this dramatic change.

****>> Five of the six New England states experienced large changes in fraud risk between 2010 and 2011. Rhode Island, Massachusetts, and New Hampshire are among the four states with the largest risk decreases, while Vermont and Connecticut both experienced large increases in fraud risk. This dichotomy could be caused by the movement of fraudsters between neighboring regions as they identify areas ripe for exploitation. Maine remained in the five lowest-risk states.

****>> The rise in the Employment/Income Fraud Risk Index over the past two years is likely the result of the decline in house prices being outpaced by the decline in the income of working households combined with more stringent underwriting and documentation requirements.

****>> Loan applications for investment properties continue to have very high fraud risk compared with owner-occupied properties.

****“Keeping our guard up as risk profiles shift requires our industry to think as creatively as the criminals,” said Kevin Coop, president of Interthinx. “That’s only possible when lenders have access to the best data and analytics available.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: Some Good Market News

*Some Good Market News*
**New Data Emerges**

***Veros Real Estate Solutions has released its VeroFORECAST real estate market forecast for the 12-month period from March 1, 2012 to March 1, 2013. The quarterly report shows that the recovery in the housing market is forecast to accelerate. The national home price index (HPI) forecast improved significantly from last quarter’s 1.3 percent depreciation to this quarter’s slight depreciation of 0.85 percent. Here’s the scoop:

****VeroFORECAST shows fewer significant drags across an increasing number of markets, many of which are beginning to emerge with initial signs of appreciation for the first time since the market’s decline. On a national level the gradual recovery in house prices is finally forecast to start accelerating, although the forecast projects the recovery to be market-by-market with not all areas expected to do well. Unemployment and housing supply remain key discriminators between the top and bottom 10 markets.

****Phoenix is predicted by VeroFORECAST to be the top performing market with a forecasted five percent appreciation. Its revival is based on the drastically reduced housing supply, great affordability and low interest rates. Also creating demand is Phoenix’s 7.9 percent unemployment rate, which is less than the national rate of 8.3 percent.

****For the third consecutive quarter, Bakersfield, Calif. stands at the bottom of the housing market with depreciation of 6.3 percent, which is a slight improvement from 6.8 percent in the previous quarter. Unemployment is at 14.3 percent and although housing inventory is coming down, the market is still experiencing a high rate of foreclosure and mortgage delinquency which continues to keep the pressure on pricing.

****The strongest areas in the United States can be still be found in the Great Plains, including regions in North Dakota, Texas, South Dakota, Nebraska, and Louisiana. Housing markets that continue to perform well and see improvement include regions in Washington D.C., Hawaii, and Alaska. Although not ready yet ready to crack the top ten, hard hit housing markets in Florida are starting to see signs of appreciation.

****Inland California and Nevada markets make up seven of the top bottom 10 markets. Recoveries in these areas will be a long time in coming due to extremely high unemployment rates that vary between 11 and 16 percent, as well as high foreclosure and mortgage delinquency rates. Additionally, Chicago, Philadelphia and Seattle are three big cities not expected to fare well in the next year.

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: The Impact Of Shadow Inventory

*The Impact of Shadow Inventory*
**New Data Emerges**

***It seems unlikely that the mortgage industry can fully recover until we work through all of the shadow inventory. And new data shows that may take more time. CoreLogic, a provider of information, analytics and business services, reported today that the current residential shadow inventory as of January 2012 was 1.6 million units (6-months’ supply), approximately the same level reported in October of last year. On a year-over-year basis, shadow inventory was down from January 2011, when it stood at 1.8 million units, or 8-months’ supply. Currently, the flow of new seriously delinquent (90 days or more) loans into the shadow inventory has been offset by the roughly equal flow of distressed sales (short and real estate owned). Here’s the full industry findings:

****“Almost half of the shadow inventory is not yet in the foreclosure process,” said Mark Fleming, chief economist for CoreLogic. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”

****“The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements. In some hard-hit markets the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows,” said Anand Nallathambi, president and CEO for CoreLogic.

****CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent, in foreclosure and real estate owned (REO) by lenders. Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed non-listed properties most likely to become REO properties. Properties that are not yet delinquent, but may become delinquent in the future, are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official metrics of unsold inventory.

****Data Highlights Include:

****>> As of January 2012, shadow inventory remained at 1.6 million units, or 6-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or REO.

****>> Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in REO (1.6-months’ supply).

****>> Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.

****>> The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.

****>> Despite 3 million distressed sales since January 2009, the period when home prices were declining at their fastest rate, the shadow inventory in January 2012 is at the same level as January 2009.

****>> The shadow inventory is approximately half of the size of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows.”

****>> The segment of borrowers that were 60+ days delinquent in the past but were “cured” and are now current on their payments is increasing. This figure was 7.2 percent in January 2012, up from 5.7percent a year ago.

****>> The total percent of borrowers who were ever 60+ days delinquent (irrespective of delinquency status today) increased to 15.5 percent in January 2012, up from 14.3 percent a year ago.

****>> The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000 (Figure 5). More importantly while the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and is up 3 percent from a year ago.

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: Who Says That Technology Doesn’t Pay Off?

*Who Says That Technology Doesn’t Pay Off?*
**Website Gets Major Kudos**

***Arguably the biggest problem that the mortgage industry faces is the foreclosure crisis. There has to be a better, faster, easier way to workout troubled loans and foreclose on loans that can’t be worked out. That’s where technology can play a role and it has. The National Mortgage Settlement (Settlement) announced last week and filed in federal district court by the Department of Justice, the 49 state attorneys general, and the five largest mortgage servicers, mentions Hope LoanPort (HLP) as a model for a neutral, national Web-based portal to facilitate compliance with the Settlement. HLP is a non-profit 501(c)(3) based in Washington, D.C. Here’s the scoop on why this matters:

****The landmark Settlement requires, among other new servicing standards, that the five mortgage servicers develop a portal that allows homeowners to submit and check the status of their foreclosure-alternative applications. The Settlement also mandates that other stakeholders, specifically, housing counselors who are working with homeowners, shall have access to a similar portal to be used to submit applications and to communicate with mortgage servicers. HLP was mentioned as a model portal in each of the separate consent orders filed in district court.

****Since its creation in 2009, HLP has been the prototype for a collaborative, multi-party, Web-based transactional platform focused on foreclosure prevention. Its mission is to provide transparent, efficient and traceable access to foreclosure-alternative options while ensuring homeowner information is securely and confidentially shared among key stakeholders such as housing counselors, mortgage servicers and homeowners. This efficiency helps everyone make informed, meaningful, and timely decisions that ultimately better serve homeowners at risk of, or in, financial distress.

****HLP has successfully worked with the housing counseling community and the mortgage servicing industry to agree upon a standard set of data and document requirements that allow consumers to apply for foreclosure alternatives. HLP has relationships with 14 mortgage servicers, including the five mortgage servicers who agreed to the Settlement. These servicers manage over 80% of the mortgages serviced in the United States. HLP is also working with over 700 HUD-Approved/National Foreclosure Mitigation Counseling (NFMC) certified Housing Counseling Agencies with over 3,800 individual housing counselors in 50 states, Washington, D.C. and Puerto Rico.

****Camillo Melchiorre, President and CEO of HLP stated, “Hope LoanPort is proud to be mentioned in the National Mortgage Settlement and looks forward to working with the mortgage servicing industry, as well as the regulatory and housing counseling communities to better address the needs of homeowners.”

****You see, technology can make a big difference.

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: More Process Automation

*More Process Automation*
**Seamless MI Integration**

***Mortgage Guaranty Insurance Corp. (MGIC), the nation’s largest private mortgage insurer, now has the availability of mortgage insurance rate quotes to lenders through the product and pricing engine piece of MarksmanLMP, from Mortech, Inc. The integration marks the first of a series of interfaces, with eligibility and MI-ordering forthcoming. Here’s the full story:

****MarksmanLMP’s mortgage insurance function is set up to automatically trigger when a loan scenario exceeds the 80% loan-to-value (LTV) threshold. The MISMO-based integration allows MarksmanLMP users to seamlessly check MGIC’s pricing without having to leave the platform. Lenders receive initial mortgage insurance rate quotes at the corporate and/or branch levels that can be dynamically adjusted according to specific loan scenarios. This fully automated two-way exchange of data provides mortgage lenders with a more efficient lending strategy, which enables a faster loan closing process and increased profitability.

****“Seamless access to MGIC’s competitive mortgage insurance rates through MarksmanLMP enables our customers to streamline their loan origination processes,” said Sal Miosi, Vice President of Marketing at MGIC. “MGIC’s partnership with Mortech is another example of our commitment to providing our customers with efficient technology.”

****“Automating more of the process of originating a loan is critical to making the loan officer of the future more efficient and effective, for both the mortgage company and the homeowner,” said Don Kracl, President of Mortech. “This is another step forward for the industry and one less thing loan officers need to worry about as they go about the business of serving American borrowers.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: HARP Is For Everyone

*HARP 2.0 Is For Everyone*
**Help For Smaller Banks**

***PROGRESS in Lending has learned that String Real Estate Information Services, a consultancy and back-office service provider to the U.S. home finance industry, has added capacity in preparation to help smaller mortgage lenders capitalize on the government’s recently announced Home Affordable Refinance Program (HARP 2). As many as 6 million homeowners may qualify to refinance existing mortgages under the program but experts say smaller institutions could benefit the most. Here’s the whole story:

****Research performed recently by FBR Capital Markets analysts predicts that the biggest beneficiaries of the HARP 2 program are likely to be smaller originators, if they are well positioned to pick up market share. Unfortunately, these smaller firms are the ones that are likely to need the most support to take on this additional volume.

****“Helping these originators find qualified borrowers, contact them with offers, underwrite and process their applications are exactly the types of tasks that our team has been built to handle easily,” said Prashant Kothari, chief executive officer for String Real Estate Information Services.”

****String has enjoyed phenomenal growth over the past 2 years and has been expanding into new markets and extending its footprint within the U.S. real estate industry. The company has been particularly successful in building capacity for title industry outsourcing. Kothari said String identified the HARP 2 opportunity last fall and has been working to build capacity since then. The company is taking on new clients for HARP 2 services now.

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: New Research Shows Mixed Results

*New Research Shows Mixed Results*
**Some Good And Bad News**

***CoreLogic, a provider of information, analytics and business services, today released its January Home Price Index (HPI) report. The report shows national home prices, including distressed sales, declined on a year-over-year basis by 3.1 percent in January 2012 and by 1.0 percent compared to December 2011, the sixth consecutive monthly decline. Nonetheless, there is some good news, too. Here’s the full story:

****Excluding distressed sales, year-over-year prices declined by 0.9 percent in January 2012 compared to January 2011, but that same metric posted a month-over-month gain, rising 0.7 percent in January. Distressed sales include short sales and real estate owned (REO) transactions.

****“Although home price declines are slowly improving and not far from the bottom, home prices are down to nearly the same levels as 10 years ago,” said Mark Fleming, chief economist for CoreLogic.

****Highlights of the Market as of January 2012 include:

****>> Including distressed sales, the five states with the highest appreciation were:  South Dakota (+5.7 percent), North Dakota (+4.0 percent), West Virginia (+4.0 percent), Montana (+3.6 percent) and Michigan (+3.0 percent).

****>> Including distressed sales, the five states with the greatest depreciation were: Illinois (-8.7 percent), Nevada (-8.0 percent), Delaware (-7.9 percent), Alabama (-7.7 percent) and Georgia (-7.5 percent).

****>> Excluding distressed sales, the five states with the highest appreciation were: South Dakota (+6.4 percent), Montana (+5.9 percent), North Dakota (+3.8 percent), Alaska (+3.7 percent) and Indiana (+2.7 percent).

****>> Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-6.7 percent), Delaware (-5.5 percent), Minnesota (-4.1 percent), New Jersey (-3.5 percent) and Georgia (-3.3 percent).

****>> Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to January 2012) was -34.0 percent.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.2 percent.

****>> The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.1 percent), Arizona (-50.8 percent), Florida (-49.0 percent), California (-43.6 percent) and Michigan (-43.2 percent). >> Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 71 are showing year-over-year declines in January, eight fewer than in December.

Progress In Lending
The Place For Thought Leaders And Visionaries

Understanding The News: A New Tool For LOs Emerges

*A New Tool For LOs Emerges*
**Fixing The Transparency Issue**

***PROGRESS in Lending has learned that Mortech, Inc., a mortgage technology software company specializing in solutions for mortgage bankers and secondary market teams, has released a new technology allowing loan officers the ability to exchange real-time mortgage application data directly with their borrowers. The secure consumer-facing portal, called Connect, is available completely free to users of Mortech’s MarksmanLMPplatform. The tool increases overall transparency. Here’s how:

****“Transparency and open communication are the keys to rebuilding trust with today’s homebuyer. And that’s exactly what the new Connect technology provides,” said Don Kracl, president of Mortech. “At the same time, originators are under pressure to expend fewer resources on every loan they close. The Connect platform makes that easy by opening up a communication line directly with the borrower and allowing them to provide more of the required information on their own.”

****Connect offers the following benefits in one tool without requiring originators to buy a new technology platform:

****>> Enhanced communication between consumers and lenders. Lender personally invites consumer to the Connect platform

****>> Eases the burdens for lenders associated with collecting 1003 loan application data from borrowers.

****>> Accelerates the application process for borrowers – full application inside Connect comes pre-populated with data already collected from any previous online short form applications.

****>> Allows lenders to access and exchange consumer data bi-directionally in LOS platform and other technologies (all data from 1003 app is stored inside MarksmanLMP).

****>> Provides borrowers with the ability to check mortgage rates for their specific lender.

****>> Gives consumers access to rate calculators: “How Much Can I Afford? Should I Refinance?” etc.

****>> Provides helpful information to consumers about the mortgage process.

****>> Creates new communication channels between lenders and Realtors for status updates.

****Connect is powered by TheMorty.com, also owned by Mortech and is seamlessly integrated into Mortech’s MarksmanLMP platform. Each originator portal is automatically branded for individual companies.

Progress In Lending
The Place For Thought Leaders And Visionaries