By Tony Garritano
What’s going on in the mortgage market? What trends should you be aware of? Tony tells you in this daily column.

Market Analysis: How Do You Select The Right Vendor?

*How Do You Select The Right Vendor?*
**By Tony Garritano**

***With compliance demands skyrocketing, lenders are turning more and more to technology. That’s a good thing. But how do you select the right vendor? It’s a tough decision. Education is needed. To this end, LendingQB has published a free white paper designed for lenders that are considering replacing their loan origination system (LOS). The paper addresses the challenges lenders face when evaluating mortgage technologies and outlines a strategy to assess their existing technology weaknesses, identifying areas for improvement.

****Entitled “The Five Steps to Making Better Technology Decisions,” the white paper recommends conducting an Enterprise Process Assessment (EPA) of lending operations and workflows. According to the paper, all too often lenders buy technology predominantly based on features, failing to perform a critical deep dive analysis of their workflow to effectively model and measure process enhancements using standards and best practices.

****The white paper stresses that before buying technology, lenders must establish an objective, well-defined, comprehensive process in order to overcome the many challenges associated with complex technology evaluations. Executing an EPA provides a clear understanding of and roadmap for how to select technology that reduces cost per loan, improves profitability, maximizes employee productivity and decrease the number of manual touch points throughout the workflow.

****Key points in the white paper include:

****>> Overview of the mortgage technology challenges lenders face in today’s market;

****>> Determining the technology lenders really need, avoiding what they don’t need;

****>> How to arrive at an evaluation readiness checklist;

****>> Identifying vaporware and avoiding feature buying traps;

****>> Using metrics to achieve a high ROI;

****>> The importance of a seamless workflow;

****>> How to reduce cost per loan and increase profitability.

****Interested parties can download the free white paper from LendingQB’s website at

Market Analysis: We Are All Connected

*We Are All Connected*
**By Tony Garritano**

***As talk about the elections in Greece this weekend heat up I’m reminded of how connected we are. Something that happens far off in Greece could spur another world economic crisis. The mortgage process is similar. Some lenders think about it as an assembly line, but it’s not because several steps can and should be happening at the same time. Originating a mortgage is more about constructing parallel workflows instead of a traditional assembly line. In order to do that though, technology has to connect all the players. Along these lines, PROGRESS has learned that ISGN has launched new integrations to Gators, its browser-based settlement services and vendor management system that enable the system to auto-populate HUD forms, automate calls to vendors, and export title data onto customer XML fields, among other features. Here’s the details:

****Gators technology provides automated and customizable workflow management tools that allow Gators customers to streamline the settlement process. The new integrations with Medallion Analytics, Voxeo and RedVision will generate substantial time and cost savings while increasing productivity for Gators customers in appraisal, title and closing services.

****ISGN’s partnership with Medallion Analytics enables Gators customers to significantly reduce the time to create the HUD form while lowering overhead costs and improving quality. Its technology extracts and analyzes data from the lender’s closing instructions and then auto-populates the HUD form in around seven minutes. On average, it manually takes about 30 to 40 minutes to fill out the HUD form. The Medallion integration also provides a post-closing audit tool that automatically un-stacks the executed closing package and scans for any missing documents or signatures. It then restacks the executed documents according to the lender’s requirements and delivers the package electronically. This product is essential for managing the unpredictable settlement services order volume at the end of every month.

****The Voxeo integration provides automated dialing and texting services. Customers can auto-assign their appraisal and closing orders to vendors without having to confirm if vendors received and accepted the order. The Voxeo system automatically calls vendors in order of preference for specified locations. If a vendor is not available the system will automatically call the next vendor in line until the order has been successfully assigned. The texting component of the system empowers Gators customers to more easily communicate with vendors that are out in the field.

****Gators also has integrated with RedVision, a real property research solutions firm that delivers a suite of title search products and municipal tax services. RedVision uses its own proprietary software TitleVision for all of its plant-based orders within certain counties and municipalities and Gators for its non plant-based orders. With the integration, RedVision can export all of its XML fields from both TitleVision and Gators onto the XML fields of Gators customers. This integration significantly improves productivity and quality by eliminating the risk of re-keying errors.

****“The new Gators integrations provide the next generation of value added services that allow settlement companies to further automate and streamline their workflow process,” said Ankush Dham, director of technology solutions for ISGN. “For instance, if a Gators customer needs an appraisal or closing order completed right away, the new Voxeo integration will expedite the order assignment process by automatically placing a call to the vendor in a specific county to confirm order acceptance. These integrations are just a sample of the many strategic initiatives we have on our product roadmap.”

Market Analysis: Use The Cloud To The Fullest

*Use The Cloud To The Fullest*
**By Tony Garritano**

***There’s a lot of talk about cloud computing these days. But how do you use it? I think that’s the question that most lenders are asking. If done right, cloud computing can add value. For example, I have learned today that CoesterVMS, a nationwide provider of appraisal management services and technology, has successfully integrated its Cloud Control appraisal management technology into the Ellie Mae Encompass360 mortgage management system, giving Encompass360 users the ability to order Coester appraisals with a single mouse click. The integration also allows users to automatically schedule appraisal appointments and process check payments through an integrated e-check tool. Here’s how the cloud is making a difference:

****“Integrating Cloud Control into Encompass360 helps ensure a hassle-free appraisal process for everyone—the lender, the appraiser and most importantly, the borrower,” said Bill Reichel, production manager for Weststar Mortgage, a rapidly growing mortgage banker with over 30 branches across the country. “At Weststar, investors appreciate our 100% compliance, which includes appraisals, and borrowers appreciate our focus on making transactions as fast, smooth and straightforward as possible. We couldn’t be happier about this integration, which enhances our performance in both areas.”

****With Coester’s Cloud Control now integrated with Encompass360, the user simply clicks “order appraisal,” enters the borrower’s credit card information and the borrower’s availability, and clicks “confirm.” The Cloud Control system auto-populates the appropriate fields in the appraisal report using information from Encompass360, then automatically finds and schedules a qualified, experienced, licensed appraiser who is available to complete the appraisal.

****Since lenders typically function as middlemen, contacting both appraisers and borrowers to schedule appraisal appointments, it can take days to over a week to schedule an appraisal. This indirect method of scheduling often results in broken and rescheduled appointments, and appraisals being reassigned to other appraisers. With Cloud Control’s automated appointment setting feature, however, Encompass360 users never have to make a call or send an email – a first for the appraisal industry.

****After the appraisal appointment is set, Cloud Control provides automatic updates to the lender and the borrower, and can deliver the completed appraisal report directly to Encompass360. When the appraisal is completed, it is quality checked with Coester’s cData, an automated appraisal review technology. Should cData uncover any discrepancies, errors, omissions or other issues, Cloud Control automatically sends the appraisal back to the appraiser to be corrected, along with detailed information on the areas in question. The appraisal does not get returned to the lender until all issues are addressed.

****“Much of the appraisal process is antiquated and redundant. That can really slow down the mortgage cycle and add costs for both lenders and borrowers,” said CoesterVMS CEO Brian Coester. “There’s no reason lenders should have to add days or even a week to the mortgage cycle just to schedule an appraisal or make sure it’s compliant and up to standard—and with Cloud Control, they don’t have to.”

Market Analysis: Is Industry Stabilization Starting?

*Is Industry Stabilization Starting*
**By Tony Garritano**

***Is our industry finally hitting bottom? According to the CoreLogic April Home Price Index (HPI) report, Home prices nationwide, including distressed sales, increased on a year-over-year basis by 1.1 percent in April 2012 compared to April of last year. This was the second consecutive year-over-year increase this year, and the first time two consecutive increases have occurred since June 2010. On a month-over-month basis, home prices, including distressed sales, increased by 2.2 percent in April 2012. This marks the second consecutive month-over-month increase this year.

****Excluding distressed sales, prices increased 2.6 percent in April 2012 compared to March 2012, the third month-over-month increase in a row. The CoreLogic HPI also shows that year-over-year prices, excluding distressed sales, rose by 1.9 percent in April 2012 compared to April 2011. Distressed sales include short sales and real estate owned (REO) transactions.    Beginning with the April 2012 HPI report, CoreLogic is introducing a new and exclusive metric—the CoreLogic pending HPI that provides the most current indication of trends in home prices. The pending HPI indicates that house prices will rise by at least another 2.0 percent, from April to May. Pending HPI is based on Multiple Listing Service (MLS) data that measure price changes in the most recent month.

****“We see the consistent month-over-month increases within our HPI and Pending HPI as one sign that the housing market is stabilizing,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “Home prices are responding to a restricted supply that will likely exist for some time to come—an optimistic sign for the future of our industry.”

****“Excluding distressed sales, home prices in March and April are improving at a rate not seen since late 2006 and appreciating at a faster rate than during the tax-credit boomlet in 2010,” said Mark Fleming, chief economist for CoreLogic. “Nationally, the supply of homes in current inventory is down to 6.5 months, a level not seen in more than five years, in part driven by the ‘locked in’ position of so many homeowners in negative equity.”

****The report also indicated that:

****>> Including distressed sales, the five states with the highest appreciation were:  Arizona (+8.8 percent), District of Columbia (6.4 percent), Florida (+5.5 percent), Montana (+5.4 percent), and Utah (+5.4 percent).

****>> Including distressed sales, the five states with the greatest depreciation were: Delaware (-11.9 percent), Illinois (-6.8 percent), Alabama (-6.6 percent), Rhode Island (-6.2 percent), and Georgia (-5.6 percent).

****>> Excluding distressed sales, the five states with the highest appreciation were: Utah (+5.3 percent), Idaho (+5.1 percent), Mississippi (+4.7 percent), Louisiana (+4.6 percent) and Arizona (+4.6 percent).

****>> Excluding distressed sales, the five states with the greatest depreciation were: Delaware (-10.1 percent), Rhode Island (-6.2 percent), Alabama (-4.4 percent), Vermont (-2.8 percent) and Connecticut (-2.3 percent).

****>> Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to April 2012) was -31.7 percent.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -23.3 percent.

****>> The five states with the largest peak-to-current declines including distressed transactions are Nevada (-58.9 percent), Florida (-46.5 percent), Arizona (-46.5 percent), Michigan (-43.6 percent) and California (-41.0 percent).

****>> Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 44 are showing year-over-year declines in April, 10 fewer than in March.

Market Analysis: Another Noteworthy Partnership

*Another Noteworthy Partnership*
**By Tony Garritano**

***Last week I heard of a partnership between AllRegs and Mortech. Today I heard of a new partnership that I also think is significant. The StoneHill Group, a nationwide provider of quality control audits, fulfillment, due diligence and FHA insuring solutions for mortgage originators, announced a strategic alliance with MRG Document Technologies (MRG), a provider of mortgage document preparation software and mortgage compliance technology and expertise that maximize profits and reduce costs for mortgage bankers. This alliance has, and will continue to, add value to clients of The StoneHill Group through the use of MRG’s CompliancePlus solution.

****“Mortgage companies, Credit Unions and Banks will benefit from this partnership because the management teams share a passion for quality in the services provided,” said David Green, president of The StoneHill Group. “Our management and staff have direct experience in the origination, underwriting, closing, post-closing, sales, and administration of file assets. It’s a win-win across the board for mortgage loan originators. MRG will deliver accurate, compliant document packages and complete the legal reviews required by state law in TX. StoneHill will do the heavy lifting of reviewing the files and delivery to investors and the GSE’s.”

****The StoneHill Group takes every measure to insure compliance, understanding that being SSAE 16 certified is extremely important to banks, credit unions and independent mortgage companies. It is definitely a positive variable cost alternative.

****MRG’s CompliancePlus represents a robust solution to the escalating demands of the regulatory environment ensuring compliance control integrated with the document preparation process. “By incorporating MRG’s CompliancePlus into services offered by The StoneHill Group, the lender benefits from MRG’s compliance coverage and an integrated DEFENSE of the content and compliance calculations,” said Mike Riddle, Managing Partner.

****Regulatory reform is underway led by the efforts of the Consumer Financial Protection Bureau, and the rules for real estate financing are changing. Lenders that use a service provider which is tightly integrated with a nationally recognized compliance provider for their QC, fulfillment and due diligence requirements are provided safeguards against mistakes and borrower or investor recourse. The partnership of The StoneHill Group and MRG Document Technologies brings confidence and competence to the mortgage banking community.

Market Analysis: ISO Launches New Standard

*ISO Launches New Standard*
**By Tony Garritano**

***Hot off the presses, I have just learned that ISO has just published a new standard for the financial services industry which provides a global solution for the accurate and unambiguous identification of entities engaged in financial transactions. ISO 17442:2012, Financial services – Legal Entity Identifier (LEI), is aimed at meeting the data collection and analysis needs of both national and global regulators in their responses to problems arising from the world financial crisis. Here’s the details so far:

***The development of ISO 17442 has been positively received by the financial services sector and by regulators. These include the Financial Stability Board (FSB) which was established to coordinate at the international level the work of national financial authorities and international standard setting bodies, and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability.

***ISO 17442 is one of the standards developed by ISO technical committee ISO/TC 68, Financial services, whose leadership was invited to participate in the FSB Industry Advisory Panel formed by the FSB Expert Group charged by the G-20 to prepare recommendations for a global LEI solution to the G-20 at its upcoming meeting in June, in Los Cabos, Mexico. In a communiqué following its plenary meeting on 29-30 May in Hong Kong to prepare its recommendations, the FSB stated that its initial reference data and LEI code are in line with ISO 17442.

***ISO/TC 68 Chair, Karla McKenna, comments: “The work on the LEI is exemplary in providing an international solution through standards. ISO /TC 68 brought the relevant communities and stakeholders together, looked across industry lines on the scope and coverage of the LEI standard, and built the necessary consensus to deliver ISO 17442, demonstrating the responsiveness and value of the ISO process.”

***James Whittle, Convenor of ISO/TC 68 working group WG 6, responsible for the LEI standard, explains the benefits of ISO 17442 as follows: “LEIs can be assigned to a legal person or structure that is organized under corporate laws of any jurisdiction. These entities include, but are not limited to, all financial intermediaries, banks and finance companies, all entities listed on an exchange, all entities that trade stock or debt, partnerships and pension funds, all entities under the purview of a financial regulator and their holding companies and supranationals.”

***ISO 17442 describes a 20-character alphanumeric code, as well as additional elements for reference data attributes. Key attributes of the standard include the following:

***>> Enables unique identification of global entities requiring an LEI

***>> Defines robust open governance of the issuance and maintenance of the LEI scheme

***>> Defines an LEI that contains no embedded intelligence

***>> Can be applied worldwide to support the financial services industry

***>> Leverages the expertise of ISO/TC 68 in defining and maintaining identifier standards

***>> Defines a scheme that is scalable and free from assignment limitations.

***An article on ISO 17442 appeared in April 2011 issue of ISO Focus+ magazine and can be accessed free of charge on the ISO Website.

***ISO 17442, Financial services – Legal Entity Identifier (LEI), is available from ISO national member institutes (see the complete list with contact details). It may also be obtained directly from the ISO Central Secretariat, price 50 Swiss francs, through the ISO Store or by contacting the Marketing, Communication & Information department (see right-hand column).

Market Analysis: It’s All About Quality

*It’s All About Quality*
**By Tony Garritano**

***Buying a quality product is better in the long run as compared to buying something subpar that’s not going to last. It’s the same when you’re talking about the loan process, you want to do what you can to ensure quality. To this end, ISGN has launched a new Quality Control Service for Correspondents, a program for correspondent lenders with warehouse lines of credit that evaluates all quality control points in the origination of mortgage loans, from the submission of a loan application to post-closing. ISGN’s quality control expertise ensures that mortgage loans are ready for delivery into the secondary market, reducing repurchase risk.

****The top five banks are facing unprecedented loan repurchase requests, reaching a record high of nearly $25 billion in the first quarter. One of the nation’s top banks recently agreed to buy back $330 million of mortgages from Freddie Mac. Many correspondent lenders are facing higher operational and warehouse line costs associated with home loans that have been refused by investors due to loan quality issues and the difficulty in selling the loans.

****ISGN’s quality control program provides correspondent lenders with a one-stop shop for evaluating origination quality. It ensures that loan submission and underwriting standards are met, while providing essential post-closing and pre-funding quality control. ISGN’s workflow –based approach to meeting secondary market investor guidelines saves correspondents the expense of loan repurchase requests and it gets loans moving again in warehouse lines. ISGN offers lenders further quality control savings with its highly skilled global facilities, providing around-the-clock services that can highlight quality control results before the next business day.

****ISGN currently is assisting one of the nation’s top lenders with 100-percent pre-funding loan review, which has reduced the lender’s loan errors by 90 percent. It is targeting the lender’s high-risk areas in post-closing, such as incomplete documentation and income calculation errors. ISGN’s quality control process is dynamic and can be re-targeted to cover any new risk elements that emerge.

****“Investing in quality control at strategic points in the origination process can reduce the time a mortgage sits on a warehouse line of credit, freeing the line to originate more loans,” said Anne Politis, president of origination strategy at ISGN. “Our quality control services can be quickly and seamlessly integrated into the correspondent lender’s processes.”

Market Analysis: Tech Vendor Gets Paperless Patent

*Tech Vendor Gets Paperless Patent*
**By Tony Garritano**

***Any time I can bring you news about advancing paperless processing, that’s what I’m going to do. I believe in it and you should, too. To this end, today I learned that Capsilon, a provider of cloud-based document sharing, imaging and collaboration solutions for mortgage lenders, said that U.S. Patent # 8,176,004 was issued to the company on May 8, 2012 to cover specific Capsilon systems and methods for intelligent paperless document management. Here’s the full details:

****Capsilon’s latest business process patent extends the capability of the company’s first patent that was issued in 2010, to cover its automated document recognition technologies that reduce 90 percent of the manual labor required per transaction to sort and name loan documents. The company’s new patent applies to its document management process, which reduces the time spent capturing and organizing documents and lowers the cost per loan by enabling users to easily label, organize, store and navigate loan documents in the lender’s preferred stacking order. The process also reduces the number of errors in document conversion and manual organization.

****Capsilon’s patents now cover the technology behind the entire paperless document management process in addition to the recognition technology. The company’s patented technologies automatically identify and index incoming images from any source and send them to the appropriate electronic loan folder using industry-standard MISMO document naming conventions. This eliminates the common requirement to use separator sheets or barcodes between documents in order to properly organize and store loan folders and means incoming documents received via mail, fax or email no longer have to be manually sorted or renamed.

****“Our patents address the growing need among lenders for a technology that receives, organizes and stores the mortgage industry’s billions of pages of information without requiring hundreds of hours to be spent organizing or accessing them,” said Sanjeev Malaney, CEO of Capsilon. “It is not enough for lenders to simply digitize loan folders. In order to collaborate efficiently and enhance business processes, they have to easily access, store, organize and navigate through loan documents. Our intelligent document management process does just that.”

Market Analysis: A Partnership That Matters

*A Partnership That Matters*
**By Tony Garritano**

***When you’re the leader in a space, who you partner with matters. When the GSEs chose Veros to run the new appraisal portal that was significant. Today I learned about another partnership like this that I think matters. Mortech, Inc., a mortgage technology software company specializing in solutions for mortgage bankers and secondary market teams, announced an exclusive new strategic alliance with AllRegs, the market leader when it comes to providing mortgage information. Under the new agreement, the Mortech Product & Pricing Engine (PPE), a tool built into MarksmanLMP, will be the exclusive PPE recipient of AllRegs’ massive loan product library, which includes loan programs for more than 70 investors, some of whom only share information with AllRegs. Here’s the scoop:

****“We’ve worked with Mortech for a number of years and wanted to create a more strategic alliance with the company,” said Dan Thoms, executive vice president and chief strategy officer at AllRegs. “We’ll be supporting loan originators through Mortech in a number of new ways, including providing educational services and special origination and compliance-focused webinars to their lender customers.”

****“This alliance solidifies MarksmanLMP’s leadership position in the market,” said Don Kracl, president of Mortech. “Marksman’s Lending Management Platform has never been a traditional PPE. In fact, that’s only one aspect of the functionality included. Because we also provide so many other tools to help loan officers qualify opportunities before entering the LOS, it was difficult for simple PPEs to compete. Now with AllRegs providing its exclusive loan library data to only to Mortech, it adds even more value to the MarksmanLMP process.”

****Previously, AllRegs provided its data to a number of PPE providers in the marketplace, but decided earlier this year to concentrate its efforts on a single strategic alliance. AllRegs subscribers will still have complete access to its AllRegs LoanLibrary data, whether they use a commercial PPE or not.

****MarksmanLMP qualifies mortgage leads prior to moving them to the LOS by simplifying, automating and organizing the entire mortgage lending process, from lead acquisition to assessment and marketing to processing. Online window shoppers are converted into customers quickly and easily, freeing up the LOS from the clutter of deals that will never close in the process.

Market Analysis: Another High-Profile Vendor Goes Mobile

*Another High-Profile Vendor Goes Mobile*
**By Tony Garritano**

***We at PROGRESS in Lending have always seen the value in going mobile. That’s why we launched the PROGRESS in Lending app for the iPad back in October of last year. I encourage you to download the free app in iTunes today. Our concept was to create an industry app that not just displays our content in this newsletter and in our magazine, but rather an industry app that houses content from a variety of sources. For example, we just added our eighth industry Twitter account to the app. You can follow all these different industry Twitter accounts from within the app. We also have contributed white papers from over 20 different companies and video content from us and four other sources. We are the first B2B mortgage publishing company to have an iPad app, but the app is not just about PROGRESS, it’s about the whole mortgage industry. So, it gives me great pleasure to write about vendors in the space that are now going mobile, as well. Here’s the latest vendor to move in this direction:

****ISGN has launched a new smart phone application for its Gators browser-based settlement services and vendor management system designed to assist appraisers, title abstractors and closing agents out in the field. The app soon will be available for the iPhone at the Apple Store where it can be downloaded. ISGN also plans to support apps for the Android phone, the Blackberry and other smart phone platforms.
ISGN has adapted mobile technology to the mortgage industry with the new Gators smart phone app, designed to assist appraisers, title abstractors and closing agents. The app enables the vendor to accept, decline or update orders while out in the field providing more efficient use of their time. The smart phone app replaces multiple manual tools for appraisers, such as note pads, voice recorders and cameras. The app guides the appraiser through the necessary process required to complete a home inspection by organizing the information and photos of the interior and exterior of the home. In addition, the app also can organize the information and photos needed for the three comparable homes required for an appraisal.

****The Gators smart phone app can organize the appraisal report, generating significant time and cost savings for appraisers. With the app, appraisers at the end of the day can upload appraisal data for the appraisal report, including photos and voice recorded comments from their smart phones to their office computer or ISGN’s global processing facilities and the next morning receive back the completed appraisal report allowing appraisers more time out in the field.

****“Gators new smart phone app can create huge time savings for appraisers. The app is very detailed and walks appraisers out in the field through what photos and information are required for the report, including comps,” said Ankush Dham, director of technology solutions for ISGN. “With the app, appraisers don’t have to come back into the office to accept or deny appraisal orders, greatly enhancing productivity in the field.”