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: Branching Out To Serve New Mortgage Entrants

*Branching Out To Serve New Mortgage Entrants*
**Credit Unions Need Automation, Too**

***The mortgage market is changing. New companies are entering and a lot of those new entrants are credit unions. However, these institutions are not mortgage experts. As such they need technology to help. To this end, PROGRESS in Lending has learned that ClosingCorp.’s SmartGFE Service is now available to credit unions. Here’s why this is significant:

****ClosingCorp’s SmartGFE Service will enable credit union lending units, whether direct or supported by a CUSO, to create instant, accurate RESPA-compliant GFEs with virtually no user interaction. The system delivers current rates for real estate closing services nationwide, as well as transfer taxes and recording fees.

****“In today’s regulatory environment, the delivery of accurate and timely GFEs is vital for credit unions, as well as all financial institutions involved in the lending process,” said Cathy Blaszyk, vice president of Lender Services for ClosingCorp. “Credit union membership is on the rise as consumers look for alternatives to large banks and are more aware of the support local credit unions can offer beyond just auto financing. Credit unions have experienced significant growth in mortgage originations since the start of the housing crisis and are uniquely positioned to capture increased market share.

****“By introducing the SmartGFE Service to the credit union industry, we are furthering our objective to help institutions increase productivity and avoid tolerance violations by guaranteeing RESPA compliance,” added Blaszyk. “Custom configuration features allow credit unions to instantly access the necessary data from specific service providers and generate highly accurate GFEs, drastically improving their lending operations and the level of service provided to their members.”

****The SmartGFE Service instantaneously generates accurate, geocoded rates for GFE Blocks 3-8 obtained from ClosingCorp’s national network of more than 10,000 real estate service providers, as well as the company’s proprietary recording fee and transfer tax database. The solution removes the need for loan officers to make decisions or manually input existing information found in a loan file.

Understanding The News: Measuring The Foreclosure Rate

*Measuring The Foreclosure Rate*
**2011 Saw Improvement**

***CoreLogic released its first national Foreclosure Report which provides monthly data on completed foreclosures, foreclosure inventory and 90+ delinquency rates. Completed foreclosures for all of 2011 totaled 830,000 compared with 1.1 million in 2010. In December 2011 there was a month-over-month decrease in completed foreclosures to 55,000 from 57,000 in November 2011. The December 2011 completed foreclosures figure was also down from one year ago when it stood at 67,000. From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures. Here’s what this means to the mortgage industry:

****The new data from CoreLogic also shows that nationally 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011. The foreclosure inventory is the stock of homes in the foreclosure process. A property moves into the foreclosure inventory when the mortgage servicer places the property into the foreclosure process after serious delinquency is reached and remains there until the foreclosure is completed. The foreclosure inventory is measured only against homes with an outstanding mortgage, rather than against all homes. Nationwide, roughly one-third of homeowners own their homes outright.

****Nationally, the number of loans in the foreclosure inventory decreased 8.4 percent in December 2011 compared to December 2010, a decline of 130,000 properties nationwide. The number of loans in the foreclosure inventory decreased by 5.3 percent in November 2011 compared to November 2010 as well.

****The share of borrowers nationally that were 90 days or more delinquent on their mortgage payments, classified as seriously delinquent, improved to 7.3 percent in December 2011 compared to 7.8 percent in December 2010.

****According to CoreLogic, servicers nationwide stepped up the rate at which they were able to process distressed assets––the distressed clearing ratio––in December 2011. The distressed clearing ratio is calculated by dividing the number of REO sales by completed foreclosures. The higher the ratio, the faster the REO inventory is clearing. The distressed clearing ratio was 1.03, up from 0.94 in November 2011.

****“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” said Mark Fleming, chief economist with CoreLogic. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”

****Highlights as of December 2011

****>> The percent of homeowners nationally who were more than 90 days late on their mortgage payment, including homes in foreclosure and REO, was 7.3 percent for December 2011 compared to 7.8 percent for December 2010, and 7.2 percent in November 2011.

****>> The five states with the highest foreclosure inventory were: Florida (11.9 percent), New Jersey (6.4 percent), Illinois (5.4 percent), Nevada (5.3 percent) and New York (4.6 percent).

****>> The five states with the lowest foreclosure inventory were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.0 percent) and Washington (1.3 percent).

****>> Of the top 100 markets, measured by Core Based Statistical Areas (CBSAs) population, 34 are showing an increase in the foreclosure inventory in December 2011 compared to a year ago, an improvement from November 2011 when 46 of the top CBSAs were showing an increase in the foreclosure inventory compared to a year ago.

Understanding The News: Stretching Partnerships Even Further

*Stretching Partnerships Even Further*
**Alliances Tighten**

***The mortgage industry is very complex. As a result, more and more companies are looking to other companies to form synergies. For example, PROGRESS in Lending has learned that United Guaranty, a national mortgage insurance company, announced today an expansion of its strategic alliance with Optimal Blue, the award winning comprehensive, Web-based platform that couples pricing and secondary marketing automation with content management for the mortgage industry. Here’s the scoop:

****United Guaranty customers can receive United Guaranty MI rate quotes and pull MI rate history while searching for investor pricing and eligibility in Optimal Blue. Under the agreement, within Optimal Blue, United Guaranty automatically delivers a mortgage insurance quote for up to five products at a time along with locking capability to originators who have a master policy, and an MI premium estimate to lenders who have not established a relationship with United Guaranty.

****“This added functionality gives users mortgage insurance pricing and comparisons to FHA pricing—without leaving Optimal Blue,” said Chris Clement, SVP-Field Production at United Guaranty. “We’re leading the industry in the investments necessary to simplify processes for customers and help loan officers get borrowers in the right loan.”

****In today’s environment, lenders must leverage every advantage to respond to consumers quickly and accurately. Within the Optimal Blue platform, users now have access to United Guaranty’s Performance Premium risk-based MI pricing, enabling them to receive either an instant estimate or a detailed quote. Users can pull a PDF of the MI quote, and because each loan has an MI history, users can also go back at any time if the loan criteria change and a new quote is needed. Users also have the option to lock the detailed quote with UG at any time.

****“Optimal Blue has always prided itself on being able to deliver the most value to mortgage lenders,” explains Lawrence Huff, co-Founder and co-CEO of Optimal Blue. “This partnership exemplifies that philosophy – as it gives customers the ability to not just lock in an MI quote, but to stay within the Optimal Blue platform. We continue to advance our platform to create the most automated workflow, giving our customers accurate data quality, better control and compliance, and improved profitability.”

****“This exclusive partnership with Optimal Blue shows our commitment to provide MI accessibility in all scenarios. This lets originators get a rate quote quickly and easily, cutting the time required to know a loan’s cost,” said Clement. “Providing the MI quote during the eligibility stage lets users know in one location that they’ve met general MI requirements.”

Understanding The News: Home Prices Dip In December

*Housing Prices Dip In December*
**CoreLogic Data Tells The Story**

***CoreLogic released its December Home Price Index (HPI) report, giving the first look at full-year 2011 price changes. The CoreLogic HPI shows that including distressed sales home prices in the U.S. decreased 4.7 percent in 2011 (compared with one year prior). This year-end report shows that home prices continued the trend of year-end decreases—this is the fifth consecutive year with a decrease in the HPI. The HPI excluding distressed sales showed that home prices decreased by 0.9 percent in 2011, giving an indication of the impact of distressed sales on home prices in 2011. Here’s the findings:

****The report also shows that national home prices including distressed sales decreased 1.4 percent on a month-over-month basis, the fifth consecutive monthly decline. However, the HPI excluding distressed sales posted its first month-over-month gain since July 2011, rising 0.2 percent.

****The December drop in home prices follows a decline of 4.3 percent in November of 2011 as compared to one year prior. Excluding distressed sales, year-over-year prices declined by 2.0 percent in November 2011 compared to November 2010. Distressed sales include short sales and real estate owned (REO) transactions.

****“While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.

****Highlights as of December 2011

****Including distressed sales, the five states with the highest appreciation were:  Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).

****>> Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).

****>> Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).

****>> Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).

****>> Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.

****>> The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).

****>> Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 81 are showing year-over-year declines in December, one more than in November.

****Full-month December 2011 national, state-level and top CBSA-level data can be found at http://www.corelogic.com/HPIDecember2011.

Understanding The News: Many Lenders Miss The Boat When It Comes To Quality Control

*Many Lenders Miss The Boat When It Comes To Quality Control*
**New Research Reveals Critical Flaws**

***The flight to quality is a big concern in the mortgage industry. Especially with all the increased scrutiny from investors and regulators, lenders have to do everything possible to originate quality loans. New data that PROGRESS in Lending got from Interthinx shows that existing quality control programs may not be going far enough. Interthinx has identified two major defects in the outsourced Quality Control programs of lenders that affected residential mortgage loan files in 2011 and may pose significant risk in 2012. Here’s the scoop on their findings:

****According to Interthinx, 40.9 percent of its Quality Control findings relate to missing documentation or data integrity issues. Eligibility and credit issues account for only 18.3 percent of 2011 findings. “Many in our industry will be surprised to learn that more than 40 percent of our findings last year were related to missing documentation or data integrity issues,” said Connie Wilson, executive vice president.

****“It’s significant when comparing this recent data to data from 2006 to 2009 when missing documentation only accounted for 7.1 percent of all findings,” said Wilson. “If lenders are not outsourcing their quality control processes, they should at least consider having someone from the outside take a look at their processes. If a lender’s internal quality control process mimics their internal originations process, the lender could easily miss documentation or data integrity issues.”

****“The shift towards manufacturing defects in 2011 from historical borrower eligibility issues is a significant finding,” added Jeremy Burcham, director of quality control for Interthinx. “Today’s borrowers are very well qualified for the most part. However, a well qualified borrower does not always protect lenders from elevated defect rates or even repurchase issues. The lender’s loan manufacturing process needs to be sound in all areas to avoid potential repurchase. A simple breakdown can leave the lender on the hook for a loan that should have been bulletproof.”

****The Quality Control process provided by Interthinx includes learning how each client does business to assist in identifying critical issues from application to close. Interthinx provides lenders statistics on the individuals who deal with their loans on a daily basis to identify training and process needs and to help lenders gain more confidence about the loans they originate.

****“If lenders haven’t used outsourced quality control in the past, 2012 may be the year to try it,” noted Wilson. “To reduce repurchase requests, most major Government Sponsored Enterprises (GSEs) recommend having an independent source back up internal processes.”

Understanding The News: Integration Aims To Stop Fraud

*Integration Aims To Stop Fraud*
**A New Alliance Forms**

***ProLender Solutions, Inc., a paperless mortgage lending software, has launched a new interface with the DataVerify DRIVE risk mitigation system. The interface will allow ProLender users to access the DRIVE platform to verify borrower and property information to aid in detecting possible loan fraud. Because the two systems work together seamlessly, ProLender users will save time and avoid possible data entry mistakes.

****“We’re pleased to partner with ProLender Solutions to provide their clients with access to the DRIVE platform,” said Kent Johnson, Vice President at DataVerify. “The combination of ProLender’s robust processing platform with DataVerify’s powerful risk mitigation system gives mortgage lenders the tools they need to improve productivity and loan quality, reduce risk, and enhance profitability.”

****From within the ProLender system, users export key information directly into the DRIVE platform. ProLender automatically launches an Internet browser where users enter their login. The DRIVE report results display on the user’s screen. The entire process only takes seconds and adds an important safeguard against fraud.

****“This interface saves our clients time, eliminates re-keying data and most importantly provides a valuable fraud detection tool,” said Kevin Roczey, President at ProLender Solutions, Inc. “It just makes sense to integrate the two systems.”

****The DataVerify integration can be run multiple times throughout the loan process. With just a click of the mouse, the user receives a thorough analysis of the borrower and property information in order to make an informed evaluation on each and every loan.

Understanding The News: Putting Together A Fraud Detection Think Tank

*Putting Together A fraud Think Tank*
**Solving Real Issues**

***CoreLogic, a provider of information, analytics and business services, today announced its Winter 2012 Mortgage Fraud Consortium Members’ Meeting beginning January 23, 2012. The three-day meeting is a unique, member-driven forum that invites lenders responsible for more than 80 percent of U.S. mortgage originations to discuss emerging mortgage fraud trends, interact with industry experts and share best practices. The Consortium is a cooperative initiative of the industry’s top mortgage lenders formed for the purpose of jointly understanding, detecting, and preventing mortgage fraud more effectively than each lender can individually.

****The keynote speaker is Rachel Dollar, a Certified Mortgage Banker and renowned attorney who represents lenders and secondary market investors in mortgage banking litigation matters. She is also editor of the Mortgage Fraud Blog, an acclaimed website for news and information on mortgage fraud and real estate fraud throughout the United States. Ms. Dollar will speak on the ongoing challenges of short sale fraud along with contractual provisions and litigation strategies to help attendees better define their approach to fraud loss recourse. She will also provide insight on recently litigated fraud cases.

****“There is great value in lenders sharing data, information, and insights to identify common fraud trends,” commented Rachel Dollar, Esq., CMB, of Smith Dollar PC. “The CoreLogic Mortgage Fraud Consortium creates a secure forum for lenders to converse openly about pressing fraud issues. This is a very positive initiative for the mortgage origination industry as a whole because lenders, investors and consumers all benefit from better fraud management.”

****“Our goal is to ensure lenders are well-informed about emerging mortgage fraud trends and equipped to effectively mitigate those risks. At this meeting, we will demonstrate the industry’s newest fraud prevention technology that enables lenders to leapfrog forward in their detection efforts. We will also provide attendees with an exclusive preview of our Mortgage Fraud Prevention Best Practices Study detailing lenders’ fraud prevention processes in origination and servicing,” stated Tim Grace, senior vice president of Data & Analytics Product Management at CoreLogic. “The results highlight strengths in key process areas as well as identify actionable gaps where criminals may potentially find opportunities.” The complete study will be released by the end of first quarter.

****Additional guest speakers include Jerome Mayne, a convicted real estate criminal who will share his journey from CEO to prison in a presentation entitled, “Fraud & Consequences,” and Tim Gallagher, FBI section chief for Financial Crimes and the National Program Manager of the FBI’s White Collar Crime Program. In addition to the external speakers, five lenders will lead interactive presentations on the application of tools and techniques to Valuation fraud, Collusion and internal fraud, Origination fraud, Strategic default patterns, and Fraud patterns in loan application data.

****The Mortgage Fraud Consortium was founded in 2008. Members represent more than 80 percent of the U.S. mortgage originations market and have agreed to contribute their loan application and fraud outcome data in exchange for quarterly fraud reporting, analytics and access to CoreLogic consortium-based mortgage fraud products. Members of the Mortgage Fraud Consortium have contributed more than 90 million loan applications to date and are adding millions more each year.

Understanding The News: The Doc Prep World Is Changing

*The Doc Prep World Is Changing*
**A New Tool Debuts**

***As new rules push lenders to be more data driven, document preparation vendors are being forced to respond. We’re seeing new doc-related products and enhancements hit the market. For example, PROGRESS in Lending has learned that Document Express, Inc. (DX), has launched a new document services platform called EliteDocs. The new platform has replaced DX’s current CyberDocs online system with an enhanced and more engaging doc prep solution for its users. Utilizing the SaaS model, EliteDocs will continue to showcase DX’s array of document preparation and mortgage closing solutions consisting of Closing Documents, Initial Disclosures, High Cost/Predatory Lending Analysis and Flood Zone Determinations, while also adding additional features, expanded functionality and a streamlined look. Here’s what this new systems means for lenders:

****DX has transformed from a traditional forms library approach to producing document packages more dynamically. This empowers DX to produce accurate, fully-compliant closing documents that are based upon the parameters of the loan file, the client, the investor and any state and federal-related requirements.

****Through the forging of a partnership with web-based paperless document solutions provider eLynx, EliteDocs will contain new features and services such as eSignatures and eDelivery. The enhanced system will also interface with eLynx’s eCN (Electronic Closing Network) and eHUD, which links lenders and title companies to improve the closing workflow for lenders and simplify the HUD reconciliation process. EliteDocs also supports new loan origination system interfaces, enhanced current loan origination system interfaces to streamline data integrity, online chat support, customizable barcoding for digital document archiving, document selection tools to print and send only selected documents and more rapid package turnaround times, just to name a few.

****“It was our goal to incorporate the best features of CyberDocs into a modern, streamlined document preparation system that was technologically and functionally superior,” said Lori Johnson, President of Document Express, Inc. “I genuinely believe that EliteDocs offers our customers every possible option and advantage. It will change the way that lenders view.”

****PROGRESS in Lending hopes to keep you updated on this and all new products that we get wind of. We’ll let you know what the market response is once we can.

Understanding The News: Home Prices Still Declining

*Home Prices Still On The Decline*
**Data And Analtics**

***More bad news for home prices. CoreLogic has released its November Home Price Index (HPI) report, which shows that home prices in the U.S. decreased 1.4 percent on a month-over-month basis, the fourth consecutive monthly decline. According to the CoreLogic HPI, national home prices, including distressed sales, also declined by 4.3 percent on a year-over-year basis in November 2011 compared to November 2010. Here’s what else the reports says:
****This news follows a decline of 3.7 percent in October 2011 compared to October 2010, according to CoreLogic. Excluding distressed sales, year-over-year prices declined by 0.6 percent in November 2011 compared to November 2010 and by 1.6 percent in October 2011 compared to October 2010. Distressed sales include short sales and real estate owned transactions.
****“With one month of data left to report, it appears that the healthy, non-distressed market will be very modestly down in 2011. Distressed sales continue to put downward pressure on prices, and is a factor that must be addressed in 2012 for a housing recovery to become a reality,” said Mark Fleming, chief economist for CoreLogic.
****Highlights of the report include:
****>> Including distressed sales, the five states with the highest appreciation were:  Vermont (+4.3 percent), South Carolina (+2.8 percent), District of Columbia (+2.1 percent), Nebraska (+1.9 percent) and New York (+1.7 percent).
****>> Including distressed sales, the five states with the greatest depreciation were: Nevada (-11.2 percent), Illinois (-9.7 percent), Minnesota (-7.8 percent), Georgia (-7.7 percent) and Ohio (-7.2 percent).>> Excluding distressed sales, the five states with the highest appreciation were: Maine (+4.9 percent), South Carolina (+4.9 percent), Montana (+3.8 percent), Indiana (+3.3 percent) and Louisiana (+2.4 percent).
****>> Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-8.8 percent), Arizona (-4.9 percent), Minnesota (-4.7 percent), Idaho (-4.1 percent) and Georgia (-3.6 percent).
****>> Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to November 2011) was -32.8 percent.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -23.1 percent.
****>> Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 77 are showing year-over-year declines in November, three fewer than in October.

Understanding The News: The 411 On Mortgage Fraud Trends

*The 411 On Mortgage Fraud Trends*
**Trends And Analysis**

***According to a report by CoreLogic, the fraud picture is mixed. The report says the industry’s overall fraud risk appears to have stabilized. After a 20% increase in 2009, the CoreLogic Fraud Index, an indicator of the relative level of fraud risk for the mortgage industry, remained relatively flat throughout 2010 and the early part of 2011. The level of fraud in mortgage originations for 2010 is estimated at $12 billion. Early indications based on the Fraud Index show that this trend is continuing for 2011.

****Based on lower projected 2011 origination volumes and continuing flat fraud levels, CoreLogic estimates that for 2011, the mortgage industry will experience $7.4 billion in U.S. residential mortgage origination fraud. This 2011 estimate is approximately 75 percent below 2005 levels. This is due primarily to lower loan origination volumes and reduced risk tolerances evidenced by tighter lending criteria.

****Examining the data by fraud type reveals several areas of concern despite the generally flat overall Fraud Index. This analysis is made possible by a newly created Alert Risk Index system from CoreLogic through which additional risk patterns can be observed. The rate of property fraud grew more than 250 percent in the last year, while identity fraud decreased significantly. When we evaluate the movement in the individual Alert Risk Indices, additional risk patterns can be observed. For example, the primary reason for the increase in the property fraud risk index is potential fraudulent flipping and flopping of properties.

****“The overall level of fraud is down substantially,” noted Dave Johnson, vice president, product line manager of Fraud and Consortium Solutions at CoreLogic. “That is the case because origination volume is down and lending standards are tightening. Fraudsters are realizing that this is not the easiest place to go so you’re left with just what I call professional fraudsters. Also refinances are a more secure loan product and refinancing is about 75% today.

****“However, what we’re also seeing is a new mix of fraud. For example, valuation has become more artful because of the level of distressed properties,” Johnson continued. “It’s not just a visual inspection anymore because the house down the block may look the same as mine but the financial situation of that house and homeowner is very different. Fraud is never static.”

****Distressed sales remain a source of significant risk. It is estimated that unrealized recoveries on suspicious short sale transactions may be costing lenders as much as $375 million per year. Unscrupulous investors, unethical real estate agents and other fraudulent loan actors in the mortgage application process are targeting distressed borrowers and arranging same day flips through the foreclosure and short sale processes. With the volumes of distressed real estate and rate of suspicious flip transactions continuing at near-record levels, lenders are being forced to cope with more of these risky transactions where information related to other potential offers is intentionally withheld. Most of the suspicious flip transactions appear to be well executed events with investment company buyers responsible for a disproportionate percentage of the risky transactions.