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: Negative Equity Situation Still Bad

*Negative Equity Situation Still Looks Bad*
**By Tony Garritano**

***I’m always looking to share good data and research with you. PROGRESS has learned that CoreLogic released negative equity data showing that 10.7 million, or 22.1 percent, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011. This is down slightly from 10.9 million properties, or 22.5 percent, in the second quarter. An additional 2.4 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.1 percent of all residential properties with a mortgage nationwide in the third quarter, down from 27.5 in the previous quarter.

****Negative equity, often referred to as “underwater” or “upside-down,” is the condition in which borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

****“Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness. The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy,” said Mark Fleming, chief economist with CoreLogic.

****Data Highlights:

****>> Nevada has the highest negative equity percentage with 58 percent of all of its mortgaged properties underwater, followed by Arizona (47 percent), Florida (44 percent), Michigan (35 percent) and Georgia (30 percent). This is the first quarter that Georgia entered the top five, surpassing California which had been in the top five since tracking began in 2009.

****>> The top five states combined have an average negative equity ratio of 41.4 percent, while the remaining states have a combined average negative equity ratio of 17.6 percent.

****>> There are nearly 22 million borrowers, or 45 percent of all borrowers, that have mortgages with an 80 percent or more loan-to-value (LTV) ratio, and 69 percent of those mortgages have above-market interest rates of 5 percent or more.  Conversely, only 54 percent of borrowers who have less than 80 percent LTV have above-market interest rates.  While above-market interest rates make refinancing at today’s historically low rates a cost-effective step for qualified homeowners, it can be more difficult for borrowers with above-average LTV ratios to qualify for refinancing.

****>> Of the 10.7 million borrowers in negative equity, there are 6.3 million first liens without home equity loans that have an average mortgage balance of $222,000. They are underwater by an average of $52,000 which equates to an average LTV ratio of 131 percent. The negative equity share for the first lien-only borrowers was 18 percent, and 40 percent had an LTV of 80 percent or higher.

****>> The remaining 4.4 million negative equity borrowers hold first liens and home equity loans with an average mortgage balance of $309,000.  These borrowers are underwater by an average of $84,000 and have an average LTV of 137 percent.

****>> The negative equity share for first lien borrowers with home equity loans is 38 percent, or twice the share for first lien-only borrowers. Over 60 percent of borrowers with home equity loans have combined LTVs of 80 percent or higher.

>****>> Of the total $699 billion in aggregate negative equity, first liens without home equity loans account for $329 billion aggregate negative equity, while first liens with home equity loans account for $370 billion. CoreLogic estimates that of the $370 billion first liens with home equity loans, $190 billion is due to the first lien component.

****>> There are 8.6 million conventional loans in a negative equity position that have an average mortgage balance of $272,000 and are underwater by an average of $70,000.

****>> There are 1.5 million FHA loans in a negative equity position that have an average mortgage balance of $170,000 and are underwater by an average of $26,000.

****>> Given that bank portfolios account for 15 percent of all first lien mortgage loans, CoreLogic estimates that 1.6 million properties valued at $105 billion of aggregate negative equity are in bank portfolios.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: A Better Way To Do Loan Workouts

*A Better Way To Do Loan Workouts*
**By Tony Garritano**

***First, I want to say: “Thank you” to all those that wrote in complimenting us on our new website. We’re always looking to improve to we can better display your thoughts and ideas so together we can improve this business. Moving on, today I want to talk about some new research. Specifically, new research by the noted STRATMOR Group reveals that providing holistic financial counseling to borrowers who are at risk of default and foreclosure can not only prevent foreclosure, but also can reduce re-default rates for borrowers. According to the November 2011 study, holistic financial counseling could reduce losses on a 10,000 file portfolio by as much as $71.5 million. Here’s the details:

****The detailed findings of the study, sponsored by Outreach Financial Services, a specialty servicer of distressed mortgage assets, are available in a white paper entitled “The Impact of Consumer Credit Counseling on Distressed Mortgage Loan Losses,” which is available here.

****“Almost 29 percent of all homeowners are underwater on their home mortgages now, owing more on them than they are worth,” said Bill Magro, President and CEO of Outreach Financial Services. “With an estimated six million plus home loans delinquent today, and the potential for another two to three million borrowers to default over the next three years, we believe we can help avoid foreclosure losses on well over one million homes,” Magro said. “That equates to saving the primary financial investment of their lifetimes for these families. It also means savings of tens of billions of dollars for the servicers of these mortgages and their investors in the mortgage-backed securities.”

****While traditional borrower counseling in default servicing focuses mainly on the monthly mortgage payment, integrating holistic financial counseling addresses the entire spectrum of a borrower’s financial picture, including lifestyle decisions. Holistic financial counselors help borrowers assess all the factors that go into monthly spending, including credit card debt, car payments, and discretionary spending.

****According to the new white paper, authored by Matthew M. Lind, PhD, managing director of the STRATMOR Group, the loan modification model of using credit counselors to work with homeowners on lifestyle savings will reduce their monthly spending by an estimated $300 per month. When combined with a prospective $550 reduction on the monthly mortgage payment from the sample loan modification, homeowners realized approximately $850 per month in freed up cash flow, sharply lowering the predictive foreclosure and re-default rate for borrowers who initially cured their loan through a loan modification.

****Standard mortgage counseling limits losses and lowers the re-default rate on loan modifications, the study notes. When taken a step further with holistic financial counseling, even greater improvements are realized. For borrowers receiving standard counseling, Dr. Lind’s research estimates annual losses avoided at $3,894 per borrower on a $210,000 average loan balance. The annual benefit increases up to $7,147 if borrowers receive holistic financial counseling that addresses not only the mortgage debt, but all aspects of their finances. Applied across a portfolio of 10,000 loans, the annual $7,147 scalable benefit would project into $71.47 million in losses avoided.

****Outreach Financial Services’ holistic credit counseling approach engages certified credit counselors who work on behalf of borrowers to reduce not just delinquent mortgage payments, but all monthly consumer debt payment obligations. This consumer-centric credit counseling approach in the loan modification process typically frees up hundreds of dollars monthly due to the lower debt payments and lifestyle spending reductions from the borrower household. The availability of this additional cash flow results in significant improvement in the performance of the modified loans, achieving lowered foreclosure and re-default results.

****When combined with additional savings, the loss avoidance and total benefit-to-cost ratio is projected to reach or exceed a 10:1 ratio for each dollar spent on this form of distressed mortgage counseling.While lender and servicer employees normally are legally restricted to only discuss the mortgage debt with borrowers, Outreach Financial Services has a unique arrangement with the National Foundation for Credit Counseling (NFCC). The NFCC has 93 non-profit member agencies and uses over 2800 certified credit counsellors to holistically review a complete financial profile with borrowers. The Outreach Financial Services-NFCC program provides borrowers with a free one hour consultation with a NFCC counselor located at one of the 800 NFCC offices nationally.

****“It is clear from the research that using a holistic financial counselling approach, with a focus on spending reduction, improved financial behaviors and adherence to a budget, can significantly reduce foreclosures,” Magro said.

****Dr. Lind’s research is based on the 2010 Urban Institute’s National Foreclosure Mitigation Counselling Program Evaluation Study. Additional data was developed from a multivariate statistical analysis based on a sample of roughly 335,000 loans tracked by LPS Applied Analytics, along with data provided by The NFCC.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Figuring Out Ellie Mae

*What Can We Learn From Ellie Mae?*
**By Tony Garritano**

***What can we learn from Ellie Mae? First, that an origination technology player can go public. I think that’s a good thing for other origination vendors. It sets a good standard to follow. Some criticize Ellie Mae’s revenue, but times are trying. In the end, Ellie Mae’s total revenue for the third quarter of 2011 increased 23% to $14.7 million, compared to $11.9 million in the third quarter of 2010. Software Solutions revenue increased 30% to $11.8 million, compared to $9.1 million in the third quarter of 2010. Network revenue was $2.8 million, compared to $2.8 million in the third quarter of 2010. But Ellie Mae’s financial reporting tells me something else about the mortgage space that goes beyond just Ellie Mae. Here’s what I mean:

****First, let’s get through the numbers. Ellie Mae reported that net income for the third quarter of 2011 was $1.0 million, or $0.05 per diluted share, compared to net income of $1.8 million, or $0.10 per diluted share, in the third quarter of 2010. Included in the results for the third quarter of 2011 was $0.4 million of one-time expenses related to the acquisition of Del Mar Datatrac. Included in net income and adjusted net income for the third quarter and nine months ended September 30, 2011, was a one-time tax benefit of $266,000 which resulted from a refund of prior years’ R&D tax credits.

****On a non-GAAP basis, adjusted net income for the third quarter of 2011 was $2.0 million, or $0.09 per diluted share, compared to adjusted net income of $2.2 million, or $0.13 per diluted share, in the third quarter of 2010. Adjusted EBITDA for the third quarter of 2011 was $2.3 million compared to adjusted EBITDA of $2.5 million for the third quarter of 2010.

****Total revenue for the nine months ended September 30, 2011 increased 20% to $36.7 million, compared to $30.6 million for the nine months ended September 30, 2010.  Software Solutions revenue for the nine months ended September 30, 2011 increased 24% to $29.5 million, compared to $23.8 million for the nine months ended September 30, 2010. Network revenue for the nine months ended September 30, 2011 increased 8% to $7.3 million, compared to $6.8 million for the nine months ended September 30, 2010.

****Net income for the nine months ended September 30, 2011 was $0.2 million, or $0.01 per diluted share, compared to net loss of $(1.1) million, or $(0.33) per diluted share (($0.07) per pro forma diluted share including the conversion of 11.8 million shares of convertible preferred stock in connection with the IPO), for the nine months ended September 30, 2010.

****On a non-GAAP basis, adjusted net income for the nine months ended September 30, 2011 was $2.1 million, or $0.11 per diluted share, compared to adjusted net income of $0.7 million, or $0.04 per diluted share, for the nine months ended September 30, 2010. Adjusted EBITDA for the nine months ended September 30, 2011 was $3.2 million, compared to adjusted EBITDA of $1.9 million for the nine months ended September 30, 2010.

****Ellie Mae says the key operating metrics as of and for the quarter ended September 30, 2011, excluding the Del Mar Datatrac acquisition:

****>> The number of lender users actively using the company’s Encompass enterprise solution (“active lender users”) increased 10% year over year to 43,183;

****>> Of all active lender users, 20,349 or 47%, were using the SaaS version of Encompass, an increase of 78% year over year;

****>> Of all active SaaS lender users, 16,196, or 80%, subscribed to the company’s bundled success-based-pricing model (SBP), representing a 139% increase year over year;

****>> 4,050 SaaS SBP users were sold, or booked, during the quarter, including 1,910 new users and 2,140 conversions of existing licensed Encompass users to the SBP model;

****>> Lender Encompass revenue for the third quarter of 2011 increased 27% to $12.1 million as compared to the third quarter of 2010; and

****>> Average revenue per active lender user in the third quarter of 2011 increased 12% over the comparable period in 2010 to $286.

****Certainly reporting on their income and revenue is a story, but that’s not the whole story. For me, the fact that the company continues to report big gains in the area of Software as a Service and that the SaaS clients are taking advantage of bundled services is the real story. This means that lenders want flexibility. They want to be in charge of their own destiny. The more vendors realize and deliver of this trend, the better off their lender clients and the mortgage industry will be.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: The Power Of The Web

*The Web/Client Server Debate is Settled*
**By Tony Garritano**

***I remember the days when we debated about client server technology vs. Web-based technology. The consensus was that mortgage lenders would never embrace the Web. Boy were those industry experts wrong. The Web is everywhere and lenders are increasingly turning to Web-based tools. Vendors are turning to the Web more and more, too. For example, CoreLogic has launched HomeStandingson RE/MAX Mainstreet, a members-only extranet website exclusive to the RE/MAX organization, including RE/MAX Affiliates, RE/MAX Employees and RE/MAX Approved Suppliers. The HomeStandings report provides property specific, easy-to-understand, professional-grade data and analytics that enable RE/MAX Agents to accurately assess the overall purchase quality of a home. HomeStandings combines property, neighborhood and market characteristics to provide a complete local understanding of a home’s value, marketability and rent potential and is available for virtually every property in the United States. Additional data taken into consideration include area pricing, surrounding market conditions, crime rates, schools, estimated market rent and investment opportunities.

****“RE/MAX is pleased to work with CoreLogic to provide our agents with detailed property data that produces a significant competitive advantage,” said Mike Ryan, executive vice president, RE/MAX Global Communications and Branding. “Home buyers and sellers are always anxious to understand the true value of their home, and increasing numbers of investors will appreciate this information in analyzing the specifics of their real estate investments.”

****RE/MAX Agents gain a greater competitive advantage with insight into the complex mix of property, neighborhood and market trends that drive property values, rental prices and market potential. Agents will provide further value to buyers, sellers and investors with essential data to help manage risk, decide whether to sell or rent properties, and perform due diligence prior to buying properties or distressed asset pools.

****Use of the HomeStandings report also has a unique component that can help agents quickly identify potentially profitable foreclosed properties that are eligible for resale based on the grade generated by the report for each property. To confirm this capability of HomeStandings, CoreLogic reviewed more than 115,000 properties that were sold as foreclosures and then resold within six months. The study revealed that properties that earned an A grade with HomeStandings had a resale profit averaging $81,000 higher than those with D and F grades.

****“HomeStandings is recognized as an important, relevant property research tool and has already delivered more than two million reports for three of the largest mortgage companies in the nation,” said H. Harper Thorpe, vice president of Real Estate Solutions at CoreLogic. “While limited information is available on consumer websites, stakeholders with real dollars on the line rely upon the increased comprehensive and accurate information brought together by CoreLogic.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: A Gift For Servicers

*Tackling The Single Point Of Contact Rule*
**By Tony Garritano**

***Servicers are plagued with, among other things, dealing with the new single point of contact rule. The good news for servicers, and mortgage professionals in general, is that vendors always catch on to provide solutions. In this case a lot of vendors have sought to solve this issue. For example, eMASON, Inc., developer of the Clarifirebusiness process automation software for the financial servicers industry, has unveiled the Clarifire Community. The new Clarifire feature, it says, enables the nation’s largest servicers to drive compliance with Department of the Treasury regulations, while delivering a solution to borrowers—and all others involved in mortgage servicing—that provides real-time access to borrower delinquency management processes. Clarifire Community is the portal through which borrowers, servicers, investors, title agents, realtors, regulators and other mortgage industry players can come together in one platform to synchronize activities relating to mortgage loans.

****Recently the Treasury Department has required lenders and mortgage servicers to provide a “single point of contact” for borrowers who need help understanding the array of loss mitigation options available to them. Moreover, those servicers are now required to maintain detailed records (with audit trails) of their interactions with borrowers. eMASON’s Clarifire Community meets both directives in a single point of access in a secure private cloud environment.

****With Clarifire Community, borrowers access their single point of contact with just one click. Banks and servicers often have over a dozen customer points of entry. With Clarifire Community, this is consolidated into one solution. A live chat feature, Clarifier Concierge, expedites the flow of information borrowers need. Clarifire automates the business processes that touch the mortgage loan, each to servicer specifications, while providing an action or contact trail that is both accountable and auditable. The various workflows and user interactions involved in delinquency management now happen in one place, in a secure, easy to use, intuitive platform.

****In addition to its auditable single point of contact features, Clarifire Community generates documents, such as borrower final workout agreements, and delivers them through a secure Internet connection. Messages are delivered instantly to borrowers, telling them that the documents are ready in the communication method of their choice…email or text.

****“Clarifire Community lets servicers deal accurately and efficiently with the volume of work they see today and are likely to continue to see in the future,” said Jane Mason, founder and CEO of eMASON. “The technology also gives borrowers a voice by letting them be informed participants in the process, which is what our regulators want to see. Technology is the heart of the solution.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Give Back

*Let’s Lend A Hand*
**By Tony Garritano**

***My great friend Roger Gudobba lives to golf. In fact, most people in the mortgage space love to golf. I always say that once they add a miniature golf component to mortgage outings, I’m in, but until that happens my skills when it comes to real golfing are lacking. My friends will attest to this fact. So, why am I talking about golf today? I just got an announcement about a company that has combined golf with charity, and those of you that read this column regularly know, I love to talk about companies giving back. In this case The Carrington Charitable Foundation (CCF) announced today that its Inaugural Golf Classic was a tremendous success, raising $350,000 to benefit the Veterans Airlift Command. Funds raised through this event will support the administrative functions required to coordinate the efforts of the VAC volunteer pilot network, which includes arranging free air transportation for Veterans of Iraqi Freedom and Enduring Freedom (Afghanistan) for medical and other compassionate purposes.

****The VAC aids wounded warriors dealing with devastating injuries and long-term hospitalization in facilities that may be hundreds of miles away from their families by providing free air transportation, donated by a national network of private aircraft owners, for the Veterans and their families.

****“This event was truly a milestone for the VAC,” said Walt Fricke, Founder/AirBoss of the Veterans Airlift Command. “The partnership with the Carrington Charitable Foundation brought a whole new group of friends together, allowing them to see and hear first-hand how extraordinarily difficult routine air transportation can be for wounded warriors, and what a wonderful experience these veterans and their families have when they are instead transported in private aircraft. Without the financial support like that of the sponsors and attendees of this event, the Veterans Airlift Command could not exist.”

****Carrington Holding Co., through its subsidiary Peregrine Jet, has been donating flights to the VAC for the past four years, contributing flight services, fuel, insurance and crew. Eager to further support the VAC in its mission to connect veterans and their families, the Carrington Charitable Foundation chose to hold its Inaugural Golf Classic to raise funds for the organization. Over 97% of total in-kind donations and funds raised by the VAC throughout the year go directly to the cause – only 2.66% are used for administrative purposes.

****“This event was a life changing experience for our employees and guests who had the opportunity to hear the stories of our injured veterans and interact with them throughout the weekend,” said Bruce Rose, CEO and Founder of Carrington Holding Company. “We believe very strongly in the Veterans Airlift Command and the work they do to unite troops with their families, and are pleased that our golf tournament could raise awareness for the VAC mission and provide funds to further the crucial work they are doing for our wounded warriors.”

****Over 100 companies and individuals participated as event sponsors.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Acquisition News

*A New Title And Data Quality Acquisition Deal Inked*
**By Tony Garritano**

***I sound like a broken record when I say now is the time to innovate, but it really is. Now is the time to take a new approach to an old method or strategy. To this end PROGRESS in Lending has learned of a creative acquisition that pledges to revamp the title sector. Charles Sanders, the founder of Urban Lending Solutions, a provider of residential and commercial mortgage products and services, has teamed up with settlement services industry veteran Michael Forgas, formerly CEO of National Real Estate Information Services (NREIS), to acquire RealtyData, a provider of title search productivity solutions. Sanders will serve as President and will hold a majority interest in the company and Forgas will serve as chief executive officer. Here’s the new company’s value proposition:

****“The technology that RealtyData has developed is very exciting and will change the way the title industry operates,” Sanders said. “That made the company a good investment at this time. I’ve known Mike for many years and look forward to working with him.”

****RealtyData technology allows title companies to automate title searches in 900 counties across the nation. In addition, a quality control engine can perform automated quality control on the resulting title commitments, reducing title agent expenses significantly.

****“The title industry has been slow to adapt to technological change, but economic pressure is forcing title agents to seek out tools that will allow them to provide their services more efficiently,” Forgas said. “Our technology allows title agents to not only be more efficient but also improve quality and at favorable prices. We must not forget about quality, especially in this time of significantly increased regulatory oversight.”

****Sanders said he and Forgas will first focus on penetrating deeper into RealtyData’s existing client base, moving good customers beyond simple searches and into the company’s quality control solution. For more information about the company, visit the website at http://www.realtydata.com/.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: A Bright Idea For Servicers

*A Bright Idea For Servicers*
**By Tony Garritano**

***Yesterday I talked about how e-collaboration can benefit servicers. Today, I want to stay on the servicing topic because it’s a huge issue for our industry. Servicers need help. So, when I hear about new innovation happening in the area of servicing, I’m going to bring you that news. PROGRESS in Lending has learned that Wingspan Portfolio Advisors, a special servicer based in the Dallas area, is preparing to launch a new affiliate company, Wingspan Information Technology, LLC, aimed at helping mortgage servicers adapt to new requirements more easily. Here’s the scoop:

****The company makes available the same capabilities that have enabled Wingspan to provide single point of contact (SPOC) access for borrowers since its inception, and brings benefits of its centralized database approach that would otherwise require significant costs for servicers and lenders to achieve. E.J. Kite, Wingspan’s senior vice president of information management, describes the technology as a breakthrough for mid-market servicers and portfolio lenders who are deeply concerned about complying with new regulations. The old way of organizing information among different internal systems and trying to make them work together often creates more problems than it solves, he feels. Wingspan Information Technologies is offering a “single source of truth” approach to information, providing much greater efficiency and real-time transparency for investors and other stakeholders.

****“When everything is in one place, it is far easier to access data and manage it,” Kite explains. “When companies use a centralized approach, everyone stays on the same page, and that includes the borrower interface teams, making single point of contact an integral part of the servicing process.”

****Kite has more than 26 years of experience in mortgage technology, including over two decades at Freddie Mac. Prior to Wingspan, he spent three years at Fannie Mae as Management Information Systems director, working with Dallas area-based technology consultants Miller & Associates, a company specializing in business intelligence and custom software development, to build out the credit performance management reporting infrastructure. A longtime advocate of centralized database structures for mortgage servicing, Kite recommended the strategy to Wingspan founder and CEO Steven Horne while the company was being formed. Using Kite’s “results-oriented approach,” Wingspan created an infrastructure to manage large amounts of complex mortgage information, delivered in a highly useful form for finely directed applications. The approach integrates teams and aligns information and users with great precision.

****“Since day one,” Horne says, “Wingspan Portfolio Advisors has been a single point of contact company, creating very effective relationships with borrowers that have led to our outstanding track record of success.” Kite and Horne are working with Miller & Associates to bring Wingspan Information Technology’s benefits to servicers and lenders with very reasonable costs and implementation timeframes. The technology is highly customizable and leverages web portals for unprecedented access to information by those who need it. “Smaller servicers, including regional banks and credit unions, can achieve a level of servicing sophistication they have not seen before with Wingspan Information Technology’s offering,” says Horne.

****“We are also working with Dedo Interactive, Inc., a Miller & Associates spin-off which specializes in touch/gesture/mobile-based technologies, on a GPS-enabled smart phone application that will prevent or minimize many types of fraud from third parties,” Kite notes. “It authenticates field services providers at property sites, receives their updates and reports instantaneously, and adds transparency to all kinds of property management activities. It even handles location-verified photos from mobile devices to prove that the grass is cut and the hedges are trimmed to specifications.”

****Wingspan Information Technology expects to accept its first clients during the fourth quarter of 2011, with implementations completed in the first quarter of 2012. “We’re excited to be making these technology advancements available to the mortgage community and expect Wingspan Information Technology to provide meaningful assistance to the overall servicing effort,” Kite says. “Wingspan Portfolio Advisors has had great results with the platform, and we look forward to sharing what we have learned.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Putting The Spotlight On Servicing E-Collaboration

*Putting The Spotlight On Servicing E-Collaboration*
**By Tony Garritano**

***I’m a true believer in electronic collaboration. It just makes sense. Why pick up the phone to order title, credit, the appraisal, etc., when you can put in an electronic order for all those services and more on a centralized system? I think this makes a lot of sense to most people in the mortgage industry, but most don’t think of it in terms of servicing, but rather in terms of origination. Not so, this approach benefits servicers, too, and vendors realize that. For example, PROGRESS in Lending has learned that DRI Management Systems, Inc. has launched the new DRI Office Service Ordering Platform, whereby servicers can automatically execute their orders for services, seamlessly manage the incoming information from providers, and tap a growing list of premiere, in-network vendors. Here’s the scoop:

****Servicers, already hard-pressed to keep up with the volume of problem loans needing attention, will find the Service Ordering Platform in DRI Office of great assistance, says DRI Chief Operating Officer Fred Melgaard. “We built the system to handle as many of the vendor ordering and management tasks as possible,” he explains. “The ordering process eliminates errors and non-reimbursable duplications, and the onboard rules engine makes ordering and acting on the results more automated than ever before. Vendor management tools are built in to maximize those relationships, and the integrated content management system stores and keeps track of things so nothing gets misplaced,” he says.

****The system keeps things as paperless as possible, eliminating the clutter and confusion in servicing operations of all sizes, Melgaard says, and the system is designed to deal with information flowing back from vendors, regardless of format. “By having everything integrated, the workflow becomes more efficient and productive, with impressive cost savings for users,” he says. Melgaard notes that a large national servicer had been spending up to a million dollars a month on duplicated orders alone and urged DRI to prioritize a solution to this problem.

****Steven Horne, CEO of Wingspan Portfolio Advisors, a Dallas area-based special servicer and long time DRI client, thinks that the cost savings offered by the Service Ordering Platform represent more than a simple benefit of using the technology. “The efficiencies and cost savings offered by the Service Ordering Platform will be very significant for our company,” he says. “A primary first lien servicer might find that with their volume, the savings would pay for most if not all of their DRI Office technology costs.”

****DRI’s Melgaard says that the company is adding vendors to its network of participating service providers. Early integrations with the Service Ordering Platform include Epiq Systems’ AACER® (bankruptcy creditor solutions), CoreLogic (automated valuations) and CoreLogic Credco (verifications services and credit reports), Equi-Trax (property valuations), NetDirector (connecting servicer’s systems to the platforms used by their law firms), SWBC (insurance coverage), and others. “We’re looking for the best vendors in the industry,” he notes. “The system benefits them too, by reducing their costs associated with order management and delivery.  All parties can focus on what they do best while we remove transaction friction and keep the default management process running smoothly.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Going Turnkey

*Going Turnkey*
**By Tony Garritano**

***Right now everyone is talking about efficiency and ease of use. Some times that means switching systems. As a result, you’re seeing vendors embrace concepts like SaaS and cloud computing to make it easier for lenders to implement new technology. For example, PROGRESS in Lending has learned that Mortgage Cadence, LLC has introduced Mortgage Cadence Symphony Reverse, a reverse mortgage software solution, allowing lenders to get up-and-running quickly utilizing standard, pre-configured workflow. Products like this not only allow faster implementation, but also allow forward lenders to dabble in the reverse world. Here’s the scoop:

****In today’s environment, reverse lenders are facing the inevitability of increased Federal and State requirements surrounding reverse mortgages, just like in the forward mortgage world. In addition, as the country continues to struggle with high unemployment rates, Americans are banking on their home values to rebound and become a possible means to retire. As a result, the ability to quickly implement upcoming changes quickly and efficiently is a growing concern for reverse lenders. Symphony Reverse was designed to fill that technology void and address those concerns by enabling lenders to eliminate manual processes and increase their productivity and throughput. In addition, large players exiting the space have left an opening for lenders to gain market share. By leveraging Mortgage Cadence’s core technology, Symphony Reverse allows those lenders to quickly enhance their core platform while taking advantage of lower implementation timeframes and costs.

****“With the higher HECM Loan Limits set to expire on December 31st of 2011, there will be a revival of proprietary products. Fortunately, Symphony Reverse is flexible enough to support such products quickly,” stated Rob Jannotte, executive vice president of product development for Mortgage Cadence. “Coupled with the fact that many large reverse lenders have left the space, an opening has been created for mid-market reverse lenders and outsiders to get in the game and look to reverse mortgages as a way to expand their product offering and increase their profits.”

****The Mortgage Cadence Symphony Reverse product will also offer integrated documents through Finale Document Services. This document preparation and delivery solution offers document management and risk mitigation services.

****We at PROGRESS in Lending will keep you informed on the success of this product and any news of other vendors making similar moves.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.