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:

4506-T E-Signing Adoption Heats Up

*4506-T E-Signing Adoption Heats Up*
**Acceptance Continues**

***Here at PROGRESS in Lending we believe that the Internal Revenue Service’s recent announcement of the acceptance of electronic signatures on the 4506T beginning January 7th, 2013 is a monumental achievement as the mortgage industry continues to strive to become a completely paperless industry. We’ve told you about how Equifax, eSignSystems and eLynx are ready to go and can support IRS compliant e-signed 4506-Ts today. A consequence of these three companies being ready is that in many cases this means that their partners are ready by virtue of their association with these vendors. For example, Document Express, Inc., a document preparation and compliance services for the mortgage industry that partners with eLynx is also prepared to enable its lender clients to e-sign the 4506-T. So, here’s what all this means for the mortgage industry:

****“Until now, errors on the form and the process of getting the 4506T signed added several days to the disclosure process,” said Andy Crisenbery, Senior Vice President of Business Operations at eLynx.  “Using eSignature technology, both the data quality issues and the time delays are eliminated.”

****“Now that lenders will be able to capture the information on the 4506T electronically, this will streamline the lender’s procedures and accelerate the processing time along with reducing costs, increasing accuracy and providing a complete audit trail,” said Lori Johnson, President of Document Express.

****Document Express and eLynx forged a partnership in 2011 to offer electronic delivery, signature, and print-and-mail fulfillment services using the eLynx Expediteplatform for DX Initial Disclosure packages.  Document Express services are fully integrated with the eLynx platform. The extension of services allows Document Express customers to prepare loan documents and then deliver those documents electronically to borrowers and closing agents, including electronic consent and signatures, without a break in their loan-processing workflow. To ensure compliance, documents that cannot be delivered electronically are automatically sent to recipients using one of eLynx’s two secure print-and-mail centers.

****eLynx’s eSignature service satisfies all requirements from the IRS from initial authentication and consent, all the way through to maintaining a tamper proof seal and audit trail of the transaction.  eLynx can provide an electronically signed 4506T with all supporting data to any IVES participant.

****“Our partnership with Document Express enables lenders to generate all the documents in a disclosure package, deliver them to the consumer, and get them electronically signed in a matter of minutes, not days,” Crisenbery said.  “Income verification through the 4506T can begin as soon as the documents are electronically signed by the borrower, ensuring that consumers get feedback on loan decisions quickly.”

The Fraud Problem Widens

*The Fraud Problem Widens*
**Government Data**

***Yesterday PROGRESS in Lending Association shared data from risk mitigation vendor Interthinx indicating that fraud in Florida is on the rise. Today, we have more shocking numbers. As we all know, the recent economic downfall led to foreclosed homes and dismal mortgage situations for homeowners across the country. According to the FBI’s most recent Mortgage Fraud Report, more than $10 billion in loans originated with fraudulent application data in 2010.

****The National Crime Prevention Council (NCPC), with funding from the U.S. Department of Justice, has recently produced new radio public service announcements (PSAs) to warn individuals about mortgage fraud and how to avoid falling victim.

****The PSAs encourage listeners to consult NCPC’s website for resources including free legitimate housing counselors who can help protect citizens from con artists trying to steal their homes.

****The new PSAs are available on NCPC’s website, along with additional resources on mortgage fraud, such as podcasts and webinars, for prospective home buyers, current home owners and victims of mortgage fraud. Also on the website is information regarding NCPC’s upcoming Mortgage Fraud Virtual Conference, which will take place spring 2013. The conference is designed to teach about mortgage fraud, preventative measures for avoiding it and what resources are available to its victims. Additionally, the conference will provide information for service providers and fraud counselors to teach them how to most effectively help those who come to them for help.

****In upcoming months, NCPC will continue to add to its resource portfolio with a new public education toolkit and online videos about mortgage fraud awareness and prevention, both of which will be hosted on the website.

National Fraud Levels Decline, But Not In Florida

*National Fraud Level Declines, But Not In Florida*
**Interthinx Releases Report**

***Interthinx has released its quarterly Mortgage Fraud Risk Report covering data collected in the third quarter of 2012. According to the most recent analysis, overall risk nationwide has decreased by nearly 8 percent to the lowest value observed in the past two years. However, significantly increased levels of fraud risk in Florida pushed it past Nevada and into the top spot for overall fraud risk.

****Florida also appears on three of the four type-specific top 10 riskiest lists this quarter. Of particular concern is the finding that in Florida, investment purchases have more than three times the level of employment/income fraud risk than purchases for primary residences.

****Other notable findings include:

****>> Florida and Nevada are the two riskiest states with Interthinx Mortgage Fraud Risk Index values of 206 and 205, respectively. Currently, Florida has 17 metropolitan statistical areas (MSAs) classified as “very high risk.”

****>> Arizona is the third riskiest state for mortgage fraud, with a risk index value of 191.

****>> California, which is the fifth riskiest state in the country, has six of the top 10 riskiest metros, including Merced — the riskiest metro in the nation. California also has one of the 10 riskiest MSAs for identity fraud, three of the 10 riskiest MSAs for occupancy fraud, five of the 10 riskiest MSAs for property valuation fraud, and eight of the 10 riskiest MSAs for employment/income fraud.

****>> Iowa City, Iowa, leads the nation in identity fraud risk with an identity fraud risk index of 325, a 118.4 percent increase from the second quarter of 2012.

****>> Miami-Fort Lauderdale-Pompano Beach, Florida, appears on all of the type-specific top 10 riskiest lists except employment/income.

****“The report shows that even when overall fraud risk is decreasing nationwide, there are still areas of concern, as we see with this quarter’s findings in Florida,” stated Mike Zwerner, senior vice president of Interthinx. “The report’s actionable intelligence helps lenders pinpoint where additional due diligence may be needed, improves loan quality, reduces repurchase risk, and ultimately helps the economy recover.”

****The Mortgage Fraud Risk Report is an Interthinx information product created by an internal team of fraud experts. This is the fourteenth time Interthinx has released its quarterly report. The report provides deeper insight into current fraud trends through the analysis of more than 12 million loan applications amassed from the industry’s use of the Interthinx FraudGUARD loan-level fraud detection tool.

Updated Data Scoring Application Emerges

*Updated Data Scoring Application Emerges*
**Checking Accuracy**

***Loan quality is the name of the game these days. To this end, Plug&Score, a business division of Scorto Corporation, has released an updated version of the Plug&Score credit scoring and risk management solutions. The Plug&Score solutions family consists of scorecard development software Plug&Score Modeler, credit scoring system Plug&Score, and loan origination system Plug&Score Loan Origination.

****“We’ve been most thorough at analyzing feedback from Plug&Score users,” says Dmitry Krivonosov, Technical Developments Director at Plug&Score’s R&D Centre. “Our vision was to go beyond increasing performance speed and adding to scorecard modeling capabilities. We have designed the whole set of new features to provide a simple, robust and efficient way of dealing with data insights.”

****Lenders, especially microfinance organizations, are facing the strong need for a reliable risk evaluation tool. Plug&Score solutions allow financial organizations to improve credit portfolio quality and deliver swift and confident service to their customers. The updated versions of Plug&Score are already rolled out to the current 250+ users. The updates have been delivered at no cost.

****Plug&Score solutions integrate scoring models into decisioning and risk management processes. Scorecard development software Plug&Score Modeler, credit scoring system Plug&Score and loan origination system Plug&Score Loan Origination allow users to make informed credit decisions and optimize their risk exposure.

****More features of the updated version of Plug&Score solutions include:

****>> A new mode is added to the workflow: Raw Data Processing;

****>> Data anomalies (missing values, wrong type values, numeric outliers) are detected automatically;

****>> Numeric columns with few values (e.g. 1, 2, 3) are automatically transformed to categorical ones;

****>> Results of raw data processing are displayed: anomaly values, detected columns, distributions, data statistics;

****>> Data analysis options can be defined by user;

****>> The user can merge several categories to a single one;

****>> The user can delete certain categories (all rows that contain the deleted category will be excluded);

****>> The user can rename categories and columns;

****>> The user can change the type of a column manually (e.g., transform numeric column to categorical one); and

****>> The dataset can be abridged to a lower amount of rows while keeping data distribution same as in the original dataset.

Charity Is Important

*Charity Is Important*
**Lender Gives Back**

***It’s the season of giving back. We all have to do our part. That means getting actively involved in local charities. For example, Churchill Mortgage, a conventional, FHA, VA and USDA residential mortgage lender that operates across 26 states, has helped provide more than $500,000 in donations to dozens of charities and organizations this year to benefit children and local communities of its branch locations.

****Maintaining its commitment to the community, Churchill Mortgage has donated or helped raise funds as well as dedicated time for various organizations throughout the year, ranging from local school systems and youth organizations to health research groups including the Alzheimer’s Association, the Leukemia and Lymphoma Society and the American Heart Association. The lender also supports organizations such as the Nashville Zoo, AMVETS (American Veterans), 147 Million Orphans Foundation and several youth athletic leagues and children’s hospitals.

****In addition, the lender will fund a food pantry through Second Harvest Food Bank again this year on Dec. 14, 2012. Employees will participate by giving away food to Second Harvest customers for the holidays. Second Harvest’s mission is to feed the hungry and work to solve hunger issues in the local community.

****“At Churchill Mortgage, we embrace the core values of caring, honesty, respect and responsibility,” said Mike Hardwick, president, Churchill Mortgage. “By donating both time and money to dozens of organizations, we’re able to positively affect thousands of lives in need and uphold these important values. We look forward to the holiday season – a time of giving – and encourage other local organizations and individuals to give back to their communities.”

Hurricane Sandy Will Have A Lasting Impact

*Hurricane Sandy Will Have A Lasting Impact*
**Market Slowdown**

***Hurricane Sandy may slow the recovery of the U.S. housing market, predicts Barry Habib, chief market strategist at Residential Finance Corp. (RFC), a nationwide mortgage lender. “The housing market is still fragile, and Sandy is likely to have weakened it. Home buyers and homeowners should be aware of how this storm will affect them, not just in damage and flooding to properties, but in unexpected after-shocks, too,” Habib says.

****Habib identifies key outcomes that homeowners, as well as those looking to buy or sell a home, should be prepared to face in addition to property damage:

Fewer Homes Listed for Sale

****Expect to see a decrease in the number of homes being listed for sale in the mid-Atlantic and Northeast in the months ahead. So if you’re looking for a home, you’ll witness a smaller selection. If you’re selling your home, this could be good news for you.

****Sale Contracts Being Put on Hold

****Many home sales as well as contracts that are in progress will be put on hold until homes can be inspected or re-inspected for damages caused by the hurricane. If you’re selling your home, don’t be surprised if a buyer interested in your property wants a second inspection of your home. And if your home is under contract, be aware that properties in areas impacted by the hurricane may require another appraisal by the mortgage lender. Estimates at property damage range from $60 billion to as much as $90 billion to date on homes in seven states.

****Fewer People Looking to Buy Homes

****Individuals are less likely to be looking for a home when they are spending time rebuilding. Plus, potential homebuyers may also think twice about owning a home if they live in an area where the hurricane has inflicted a good deal of property damage. If you’re in the market for a new home, this may mean less competition for homes. And for those with a home on the market, there may be less traffic from potential buyers, at least in the near term.

****Further Delays in Foreclosures

****The number of foreclosed homes has already been a factor in slowing the real estate market recovery. Damage to properties in key states such as New York and New Jersey will slow the pace of foreclosure sales, further weighing on home prices.

****Lower Home Prices

****Delayed property sales, more reluctant homebuyers, and an increased number of foreclosures will likely mean lower home prices, especially in the areas hit hardest by the hurricane. Depending on whether you’re looking to buy or sell your home, this could either be good news or bad news.

****The Potential Upside: Lower Interest Rates

****The impact of the storm may keep interest rates low for an extended period of time, Habib notes. That’s a piece of positive news for people in the market for a new home.

****The Bottom Line

****“Hurricane Sandy has inflicted much damage to homes and businesses along the East Coast. It would be difficult to overstate the devastation of this storm,” Habib says. “To some, the storm could bear some bad news extending well beyond property damage. For potential homebuyers, lower home prices and continued low interest rates may offer a small silver lining to an otherwise distressing situation. Ultimately, buyers who were on the fence may find that the cost of purchasing a home has become even more attractive,” Habib says. “That means good news for both homebuyers and home sellers.”

Lender Exposes Their LOS To The Borrower

*Lender Exposes Their LOS To The Borrower*
**New Approaches**

***PROGRESS in Lending is always looking at new ways that lenders are improving the mortgage process. To this end, Mortgage Network, Inc., an independent mortgage lender and a member of the newly formed PROGRESS in Lending Association Lender Panel, has launched an enhanced option, Perfect Connection, that allows customers to start the loan process inside their proprietary Loan Operating System, accelerating their loan approval process. Here’s how it works:

****Perfect Connection offers a guaranteed, secure option for borrowers to begin their loan processes in a timely and efficient manner. This efficiency will result in less steps and touches, resulting in greater data integrity and better communication.

****“We are very excited to offer this convenience to our customers,” said Brian Koss, Executive Vice President for Mortgage Network, Inc.  “We have taken our technology a step further than most by customizing it and building it out internally to ensure a Perfect Connection between the customer, our origination system and operations platform. This real-time integration eliminates uploads and updates so that we don’t depend on others to move quickly and adapt. We are confident that our platform is fully built to support our growth plans for many years and homebuyers to come. ”

****Customers can get started by visiting www.mortgagenetwork.com.

****Mortgage Network, Inc. is a private mortgage banking company founded in 1988 by Robert McInnes and Albert Paré III who have co-managed the company since its inception. Mortgage Network is one of the largest independent mortgage companies headquartered in New England. The company has established over forty lending offices providing retail mortgage services.

E-Signatures Are Now Poised To Go Mainstream

*E-Signatures Are Now Poised To Go Mainstream*
**The IRS Impact**

***As has been reported by PROGRESS in Lending, the IRS will begin accepting electronic signatures on the 4506-T starting early next year. This is a big step because this was the last disclosure that could not be e-signed. Now the migration to a fully e-signed upfront disclosure process is possible. Many lenders already accept e-signed disclosures today to ensure ironclad compliance with new rules and regs, and force the borrower to wet sign the 4506-T. Now the IRS is no longer a barrier to offering a fully e-signed process. And today two vendors have stepped up to meet the IRS’ e-signing requirements to pave the way for others to follow. Here’s the scoop:

****First, eSignSystems is supporting and is in full compliance with recently published guidelines by the Internal Revenue Service (IRS) allowing electronic signatures on common mortgage origination documents, 4506-T and 4506-EZ. With less than 60 days to go, January 7th, 2013, marks the date that the IRS will begin accepting e-signed 4506-T documents, which will help further the adoption of e-signatures and paperless transactions throughout many financial business sectors. eSignSystems’ SmartSAFE application provides all audit, reporting and record retention required of Income Verification Express Service (IVES) vendors. IVES vendors provide a critical part of the loan underwriting process, including verification of income with the IRS and other services such as quality control and data risk analysis.

****“IVES vendors that choose SmartSAFE are provided with the ability to offer their own e-signature solutions, and can accept e-signed 4506-T forms from other vendors,” said Kelly Purcell, Executive Vice President of Wave’s eSignSystems division. “SmartSAFE provides the IVES technology backbone, making it easy to aggregate all 4506-Ts and provides a unified audit and reporting platform.”

****eSignSystems played an active role in helping to educate the IRS on the value and acceptance of eSignatures as a participant in the Mortgage Banking Association (MBA) ResTech IRS workgroup. Anticipating the passage of the IRS guidelines, the eSignSystems team has been preparing customers for the seamless addition of the 4506-T document, which will eliminate existing exception processes.

****“IVES vendors have a great opportunity to expand the services they offer to customers by supporting the newly allowed 4506-T eSignatures,” advised Purcell. “However, the IRS places specific obligations on IVES vendors handling e-signed 4506-Ts to warrant the validity of all e-signed documents, both in terms of the e-signing ceremony and document tamper detection, for a period of two years. A third party audit of procedures is also required for e-signed 4506-Ts, with specific audit metrics reported to the IRS annually.” eSignSystems is fully compliant with all these rules today.

****Second, Equifax has also enhanced its proprietary verification service systems in anticipation of the Internal Revenue Service’s (IRS) recent announcement to allow the use of e-signature technology for both taxpayers and lenders in order to eliminate “handwritten-only” signature requirements on forms vital to securing tax transcripts. This new IRS program will be added to the growing list of applications Equifax has previously implemented, which allow electronic signatures in the marketplace to help ensure program participation and compliance.

****Equifax is also a key participant in the IRS’ “Send My Transcript” online application service pilot, which will enable taxpayers to request tax transcripts directly from the IRS online, and have them instantly delivered to a selected lender via their tax transcript vendor, in lieu of using a 4506-T consent form.

****Equifax is using e-signature technology to enhance its IRS Tax Transcript Fulfillment Service. As an example, the 4506-T is a critical requirement for originating or modifying loans, since tax transcripts are required to validate income. Historically requesting and obtaining consumer authorization on the this consent form has been a highly manual process — often resulting in lost documents, fraudulent applications and long processing times that delay or prohibit loan closing. Equifax and others participated in a pilot program with the IRS between July 2011 and March 2012 to validate this process not only in mortgage, but also other industries requiring the verification of actual income of applicants.

****Now that the IRS is accepting e-signatures and vendors are fully compliant, the only missing piece is adoption.

Reaching Out To Potential Home Shoppers

*Reaching Out To Potential Home Shoppers*
**New Service**

***As refinances dry up eventually, lenders are going to have to find creative ways to attract new business. One way to do that is to use technology to better educate real estate professionals and consumers about the houses on the market as early and often as possible. If this happens, more borrowers might come to the lender looking to buy a house instead of the lender having to work as hard to get new deals. For example, RES.NET, a provider of software applications connecting real estate professionals and consumers, has added a prelist functionality to its Buyer Portal, allowing prospective homebuyers using RES.NET to search properties not yet published on the multiple listing service (MLS) or listed on the market.

****RES.NET now allow agents and brokers to tag bank-owned, short sale or resale properties as prelisted homes for borrowers and investors to view before they are officially listed for sale. Then, through the RES.NET platform they can contact agents to begin the purchase much earlier in the process than otherwise possible. Each prelist property listing provides a full description of the home including features, amenities, map and photos as well as contact information for the listing agent and buyer’s agents. Prospective homebuyers can also request a showing or submit an offer directly through the Buyer Portal.

****“By adding prelist inventory to our Buyer Portal we are giving homebuyers the opportunity to easily view properties not available on other buyer or real estate websites, allowing them to get a head start contacting agents and preparing offers,” said Todd Mobraten, COO and president of RES.NET and USRES. “This feature also empowers agents leveraging our Agent Portal, as they can increase their opportunities to represent both sides of their listings and can dramatically reduce timelines for their clients.”

****RES.NET’s Buyer Portal allows potential homebuyers to streamline their transaction by searching for properties and agents, tracking properties, submitting purchase inquiries, requesting showings and easily communicating with all involved parties in real-time online. The Buyer Portal is one of RES.NET’s six portals that close the communication gaps between real estate professionals and consumers by centralizing all information and documentation.

Lender Supports Our Troops

*Lender Supports Our Troops*
**Making A Difference**

***Fairway Independent Mortgage is once again joining forces with the Boot Campaign and the Military Warriors Support Foundation, non-profit organizations supporting returning American military troops, to present a “mortgage free” home to a wounded military veteran and Purple Heart recipient. U.S. Army Staff Sgt. Edward Cummings, who served in both Iraq and Afghanistan, and his family will be honored as part of Operation Grateful Nation, a special celebration.

****A New Hampshire native stationed at nearby Fort Polk, Louisiana, Cummings made it his goal to join the military following the 9/11 attacks, while he was a freshman in high school. Cummings was deployed to Iraq as a Reconnaissance Team Leader between 2007 and 2009 and to Afghanistan from 2010 to 2011. On January 24, 2011, while serving as a squad leader for a scout platoon in the Logar province of Afghanistan, Cummings was struck in the knee by enemy fire. While his injury meant he could no longer serve as an infantryman, after undergoing six months of physical therapy in the U.S., Cummings volunteered to return to Afghanistan, where he completed his deployment. Cummings plans to use the GI Bill to earn a bachelor’s degree. He and his wife, April, are expecting their first child.

****Said Louise Thaxton, director of Fairway’s Military Mortgage Division, who operates offices near Fort Polk: “Many of us in Louisiana have heard Staff Sergeant Cummings’ story and we are truly proud to have a real American hero in our midst. He not only sustained a life-altering injury, but then he returned to the battlefield—which shows tremendous courage and commitment. We are incredibly grateful for the sacrifices that Staff Sergeant Cummings and so many other servicemen and women and their families have made for our freedom.”

****Fairway Independent Mortgage is a proud supporter of the American military and has helped thousands of active troops and veterans nationwide realize their homeownership dreams. Fairway employees have pledged several hundred thousand dollars in donations over a 12-month period to help provide mortgage-free homes to veterans in association with the Boot Campaign, a non-profit organization supporting returning American military troops, and made possible through the Military Warriors Support Foundation’s Homes 4 Wounded Heroes program.

****After acquiring distressed properties from financial institutions, the Military Warriors Support Foundation uses funds provided by Fairway to provide accommodations and modifications for the specific heroes. In addition to the home, the families receive three years of family and financial mentoring. The Cummings’ new three-bedroom, two-story home, located in Edward Cummings’ hometown of Manchester, New Hampshire, was donated by Chase Bank.

****Cummings and his family will be honored at a special presentation during Operation Grateful Nation, a daylong celebration honoring veterans of the United States military with special emphasis this year on Vietnam veterans. The event will also include skydivers jumping with a U.S. flag and posting of the colors for the Army, Navy, Air Force, Marines and Coast Guard. A Fallen Soldier Ceremony to memorialize those lost in all wars will follow the posting of the colors.