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: A Real Foreclosure Fix

*A Real Foreclosure Fix*
**By Tony Garritano**

***The government has and will again come into our space with programs to avert foreclosures. I would assert that some foreclosure will and have to happen regardless of the government’s good intentions. Instead of pushing plans on servicers, the real foreclosure fix is to empower servicers to work with these borrowers in a more meaningful way so workouts last and foreclosures that are inevitable happen and clear the way for faster recovery. How do you do this? For example, PROGRESS in Lending has learned that IndiSoft has released enhancement to its RxOffice Premium Counselor Edition. The enhanced version of the company’s module gives counseling agencies a tool to better manage internal business operations including various kinds of counseling offered and the day-to-day activities at the agency. The module also features the ability to electronically post data to the HUD Housing Counselor System. Here’s the scoop:

****The surge in the number of homeowners needing counseling to make informed housing decisions has increased exponentially during the last two years. RxOffice Premium Counselor Edition can be used by any HUD-approved agency participating in HUD’s Housing Counseling Program. These agencies are required to use a client management system to track their counseling activities and any information or data provided. By using the RxOffice module, agencies have an automated means of collecting, storing and transmitting HUD required information.

****“Timely reporting to HUD in their specific format is an essential part of a counseling agency’s day-to-day process,” said Sanjeev Dahiwadkar, CEO of IndiSoft. “RxOffice Premium Counselor Edition takes this time-intensive process and give agencies the tool they need to quickly and efficiently manage the unprecedented number of consumers who need assistance.”

****RxOffice Premium Counselor Edition is a web-based case management tool that is highly scalable and flexible. The module features a secured, proprietary messaging system to send to and receive messages from other users and can be integrated with email software to auto-file inbound/outbound emails with associated cases.

****In my view we need more technology and less one-size-fits-all government plans to get us back on the road to prosperity.

Market Analysis: You Got To Have Fun

*You Got To Have Fun*
**By Tony Garritano**

***I want to start today’s column by saying that I am not a football fan, but when I got this today I could not resist sharing it because I know a lot of people love football. Veros Real Estate Solutions (Veros), a collateral valuation technology, enterprise risk management, and predictive analytics provider, said that it can’t predict whether the New England Patriots or the New York Giants will win Super Bowl XLVI on Sunday, Feb. 5. However, its real estate market forecast tool, VeroFORECAST, can provide some insight into the housing market where the stadiums for each team resides for the coming year, ending February 1, 2012. Here’s the story:

****New England Patriots

****Gillette Stadium, home of the New England Patriots, resides in Foxborough, Mass., approximately 21 miles southwest of downtown Boston. VeroFORECAST foresees a relatively stable and flat market with only 0.7 percent depreciation forecasted for the Foxborough area over the next 12 months due to favorable interest rates. Housing supply is currently down by more than half from the peak of the housing crisis and unemployment rates are in the mid six-percent range, which is better than the national average at 8.7 percent. Thus, there is not an expectation of significantly depressed housing prices.

****New York Giants

****MetLife Stadium, home of the New York Giants is located in East Rutherford, New Jersey and is the most expensive NFL stadium ever built, as well as the largest stadium in the NFL in terms of permanent seating capacity. A part of the New York Metropolitan area, East Rutherford is forecast to see depreciation during the next year of 3.6 percent in its market. Housing supply has remained constant for an extended period of time without significant declines. The unemployment rate has stayed near the national average, previously stated to be at 8.7 percent.

****As host city to Super Bowl XLVI, Indianapolis’ housing market is forecasted to appreciate 0.9 percent in the coming year. The market did not experience the big run up in prices associated with many other still struggling markets and housing supply overall appears healthy. Affordability here remains steady with the unemployment rate hovering around the national average. Thus the outlook for home prices looks positive for the future with no significant upward or downward pressures.

****Veros’ most recent VeroFORECAST for the national housing market for the 12-month period ending December 1, 2012 can be found in the company’s online newsroom.

****What a hoot. There’s great information here. I hope you enjoyed this as much as I did.

Market Analysis: Judging Risk

*Judging Risk*
**By Tony Garritano**

***Lenders today are trying to be more risk averse. But is it working? CoreLogic released its fourth quarter 2011 multifamily applicant risk (MAR) analytics. The fourth quarter MAR Index value increased three points from the previous two years showing a higher renter credit quality through the end of 2011. Here’s the scoop:

****The MAR Index for fourth quarter 2011 is based exclusively on applicant traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model and is updated quarterly to provide property owners and managers with a benchmark against which to compare their portfolio’s performance. With this unique applicant risk index, property managers and owners are able to compare their applicant credit quality trends with that of the average MAR Index trends. This comparison indicates whether their portfolio is performing above, below or at market levels with respect to attracting and securing applicants with higher credit quality and an increased likelihood of fulfilling their lease obligations.

****When compared to the fourth quarter of 2010, the MAR Index increased three points in overall national renter credit quality, indicating a slightly better applicant pool. When comparing applicants for one- versus two-bedroom units, the MAR Index is slightly higher for one-bedroom units at 101, compared with 100 for two-bedroom units in the fourth quarter. The fourth quarter 2011 national MAR Index, which includes studios, one-, two-, three- and four-bedroom units (BR), was 101. This is a three point decrease in overall national renter credit quality from the third quarter value of 104, largely reflecting seasonal fluctuation typical of lower applicant traffic periods of first and fourth quarters.

****Regionally, the South and Midwest had the lowest MAR Index with values of 97. The Northeast continues to have the highest MAR Index with a value of 110. From a Metropolitan Statistical Area (MSA) perspective, the three MSAs with the leading decreases in the MAR Index were Buffalo-Niagara Falls, N.Y.; Miami-Fort Lauderdale-Pompano Beach, Fla.; and Phoenix-Mesa-Scottsdale, Ariz.; with decreases of three, one and one point, respectively. The three MSAs with the leading increases in the MAR Index were San Jose-Sunnyvale-Santa Clara, Calif.; San Antonio, Tex.; and Salt Lake City, Utah; with increases of five points.

Market Analysis: LOS Joins The Mobile Revolution

*LOS Joins The Mobile Revolution*
**By Tony Garritano**

***Those fingers are flying over mobile keyboards with people now spending, on average, 94 minutes per day using mobile applications, according to analytics firm Flurry. Meanwhile, web consumption, on both desktop and mobile devices, has started to show a slight decrease. Realizing this trend PROGRESS in Lending was the first business-to-business mortgage publishing company to expose our content as well as mortgage industry Tweets, cutting-edge white papers and prominent research reports all within a free app that you can now get on iTunes. For your convenience the app is called called Progress in Lending. With the expansion of mobile technology, PROGRESS in Lending has learned of an LOS that is now joining the mobile revolution. Here’s the story:

****Mortgage lending technology provider LendingQB announced the availability of mobile app companions to their cloud-based, end-to-end loan origination system. The LendingQB apps are designed to enhance the loan closing process by keeping loan officers in constant contact with their loan origination system. “Mobile applications need to be more than a gimmick,” said Binh Dang, LendingQB’s managing partner. “The LendingQB mobile apps provide useful functionality that helps loan officers stay on top of their loans and foster better communication with their customers.”

****Available for free on both Android-based smartphones and Apple’s iPhone, the LendingQB mobile app is linked directly to the full LendingQB mortgage loan origination system and provides mortgage professionals with the ability to view real-time status updates of loans in their pipeline, as well as track when loan milestones have been achieved.

****The LendingQB mobile app also includes a loan pre-qualification and pricing tool that is linked to LendingQB’s built-in automated underwriting engine, PriceMyLoan. Users can enter in loan scenarios and instantly view eligibility and real-time pricing results. Loan scenarios can be saved for quick access at a later time.

****“Our mobile apps are designed to leverage the best features of our full loan origination system, but in a way that makes sense,” said Linn Cook, marketing director at LendingQB. “Providing loan officers a snap shot of their loan pipeline not only keeps them informed, but it cuts down on the amount of calls that loan processors and underwriters have to field. Additionally, using a smartphone to get instant quotes on loan eligibility and pricing lets loan officers make a powerful impression on prospects and generate more leads.”

****LendingQB is a 100% web browser-based loan origination system designed for mortgage lenders and bankers. A set of tools are available to facilitate a seamless end-to-end mortgage workflow process, from loan origination to funding. But the cloud-based aspect of the system is what enables LendingQB to deliver a unique mobile experience.

****“Web-based or cloud-based computing is no longer an experiment, it’s become a virtual necessity in the business world,” said Cook. “The same can be said about mobile computing. It’s not just about emails or playing games. We believe that mobile loan origination is going to transform the way that mortgage lenders do business. Our goal is to keep our clients on the leading edge of mortgage technology.”

Market Analysis: JP Morgan Gives Tech Vendor Cash Infusion

*JP Morgan Gives Vendor Cash Infusion*
**By Tony Garritano**

***Who said technology is a bad bet? Well, it’s not. In a down market, technology can be the differentiator needed to succeed. And I’m not the only one that feels this way. PROGRESS in Lending has learned that JP Morgan has given a prominent mortgage technology vendor a new $20 million line of credit. Here’s all the details:

****ISGN Corporation, has obtained a $20 million secured line of credit from JPMorgan Chase Bank, N.A. (“J.P. Morgan”). It is a line of credit available through November 21, 2012, subject to certain conditions, enabling ISGN to utilize the entire $20 million immediately to take advantage of significant market opportunities in the first half of 2012. It refinances and replaces a $15 million line of credit previously provided by a different bank and is priced at an improved interest rate of 3.25 percent plus LIBOR subject to certain terms and conditions.

****ISGN’s majority shareholder, Chambal Fertilisers and Chemicals Limited, based in New Delhi, India, enjoys a close business relationship with J.P. Morgan and provided the support necessary for ISGN to secure the funding at these favorable terms.

****“This is a solid line of credit from one of the preeminent names in global banking,” said Shailendra Gupta, chief financial officer of ISGN. “The $20 million credit line by J.P. Morgan, combined with $30 million in additional funding ISGN obtained from its investors last summer, positions us well going into 2012 to bring to market a number of new and improved solutions for our lender and servicer clients.”

****ISGN touts that it has more than 1,000 customers, including large global banks and many of the top 10 lenders in the country. ISGN’s product line includes a complete range of solutions for lenders, brokers and servicers. ISGN is funded by venture firms New Enterprise Associates (NEA) and IndoUS Venture Partners (IUVP), and by CFCL Overseas Limited, an SPV of Chambal Fertilisers and Chemicals Limited, a KK Birla Group company. Based in Melbourne, Florida, ISGN now employs more than 1,000 people across six domestic centers and two international facilities.

Market Analysis: Not Everyone Is Doing Poorly

*Not Everyone Is Doing Poorly*
**By Tony Garritano**

***Tonight my older son will be performing in a school play. I love the school plays. They’re just great. As a parent you sit in the audience looking at your child shine and it’s truly amazing. So, today I’m in a great mood. As such, I want to spread that mood to you. To this end, in a departure from the usual bad news of the day, I want to be positive today. There are companies that are doing well in this environment and you can do well, too. Here are two examples of successes:

****First, PROGRESS in Lending has learned that Mortgage Cadence, LLC saw tremendous growth in 2011, enabling an aggressive trajectory for 2012. Due in part to the partnering of Monitor Clipper Partners and Mortgage Cadence in 2010, this acquisition allowed Mortgage Cadence to expand its technology offerings.

****By ramping up staff in 2011, Mortgage Cadence was afforded major system advancements. For one, the company deployed its private cloud in late 2010, boasting 99.999% uptime to date. In addition, Mortgage Cadence Symphony and Orchestrator are now delivered through a private cloud and are available immediately to clients anywhere with an internet connection. Also, both solutions now include Opus out of the box, which enables OCR forms recognition and indexing of mortgage and mortgage related documents. Opus also supports data extraction and comes with a compare feature in the Orchestrator lending platform, which compares the data in the system to the data on the document. This is an important feature for compliance and post-closing quality assurance.

****CEO of Mortgage Cadence, Michael Detwiler, provided insight into what some describe as the cutthroat nature of the mortgage industry, “Many technology providers have chosen not to evolve to meet the heightened demands of the current industry and instead update their systems only when necessary in an attempt to remain compliant with regulations and lenders’ needs. By not taking the lenders’ businesses beyond a manual and often disparate process, these vendors are competing in an industry that will soon leave them behind. Mortgage Cadence has left the competition behind this past year by excelling where others have failed.”

****Also, Capsilon, a provider of cloud-based document sharing, imaging and collaboration solutions, reported the company has doubled its monthly revenues in 2011 despite market challenges and achieved this milestone in August, three months before its fiscal year ended.

****Capsilon attributes its success to its technology advancements, signing new clients and the growth of existing clients, including two of the top 10 residential mortgage lenders in the U.S., which were signed in 2010. To accommodate this rapid growth, Capsilon expanded its leadership team, hiring two senior level executives: David Sohm as chief operating officer and Sheila Plunkett as vice president of Sales.

****The company introduced Katalyst 7 to enable financial institutions to extend collaboration and enhance workflow of electronic documents across organizational boundaries. Katalyst Enterprise Edition was also introduced in 2011 for larger financial institutions and integration partners to more easily manage and share electronic documents by seamlessly connecting existing workflow systems, document repositories, loan origination and other operational systems with Katalyst via an API toolkit.

****“We strive to continuously create and enhance electronic document management technology to fulfill the needs of financial institutions regardless of their size,” said Sanjeev Malaney, chief executive officer of Capsilon. “The effort to reduce the use of paper documents has been a growing trend which we expect to accelerate in 2012. With increasing regulations and growing cross industry collaboration needs, the adoption of cloud-based, paperless technology will be vital. We make every effort to alleviate industry communication gaps, make the transition to paperless seamless, enhance document sharing and help companies provide higher levels of service to their customers.”

****So, here you have two companies doing well. Why are they doing well? Because they’re innovating and meeting the needs of their clients. So, success is possible, even in a down market.

Market Analysis: Let’s Solve The REO Problem

*Let’s Solve The REO Problem*
**By Tony Garritano**

***We hear a lot about the REO issue these days. Let’s face it, it’s dragging our industry down. So, how do we fix this? We need more players to step up with creative solutions. For example, PROGRESS in Lending has learned that Carrington Holding Company, LLC (Carrington) has an agreement with certain investment funds managed by Oaktree Capital Management, L.P. that will fund an initial purchase of up to $450 million in distressed single family homes on a national basis. These homes will be managed as rental properties by Carrington, to meet the growing market demand for rental units, and as part of the industry’s effort to remove distressed properties from the sales inventory to help stabilize the housing market. Here’s the scoop:

****Carrington, which currently manages over 3,000 single family rental homes under Fannie Mae’s Tenant-in-Place and Deed-for-Lease programs, was the first company to pursue a strategy of renting out REO (lender-owned) properties, and has developed a national field services network along with a proprietary software system that allows for centralized property monitoring and management.

****“We believe that re-deploying vacant REO properties into rental homes is a way to help revitalize the housing market,” noted Carrington Founder and CEO Bruce Rose. “Reducing the number of distressed properties for sale can help stabilize home prices and putting families into currently-vacant homes can begin the healing process for neighborhoods that have been damaged by foreclosures.”

****“Carrington’s REO rental program is an excellent fit for our investment strategy, which includes a broad range of debt and equity investments in real estate-related investments and restructurings.” said John Brady, Oaktree’s head of global real estate.  “We believe that this is not only a unique investment opportunity with few qualified large-scale competitors, but one that also has the potential to have a broader positive effect on the housing market and the overall economy.”

Market Analysis: Originators Are Hurting

*Originators Are Hurting*
**By Tony Garritano**

***The current mortgage market has been unkind for sure. Originators, among others, have been hurt for sure. How much? I just got research from Hammerhouse LLC, a national recruiting and strategic growth firm for the financial services industry with mortgage sales and leadership placement at its core, that is very telling. The company released the results from its Second Annual Survey of Originator Opinions. This 14-question survey was completed by approximately 400 active mortgage loan originators and asked originators for their opinions on critical issues facing the mortgage industry and impacting their job performance. Here’s the findings:

****Originators responses indicate a strong preference to:

****>> See clarification of regulatory issues outstanding in the industry.

****>> Work with regional rather than national lending organizations.

****>> Find a home with financially secure lending organizations with effective operations and marketing.

****>> Value the leadership, communication, integrity and culture of an employer.

****>> Work with a recruiter to identify potentially better matched opportunities.

****“Mortgage loan originators have had a difficult couple of years. The housing crisis and regulatory responses have led to a 50% decline in the ranks of originators according to the US Bureau of labor Statistics,” commented Drew Waterhouse, Managing Director of Hammerhouse. “However, those that remain are focused on rebuilding the mortgage industry to make it the best it can be by demanding that lenders are executing effectively for consumers.”

****The Survey questions cover important factors from each of the six core business areas identified by Hammerhouse as integral to the model-matching relationship between originators and lenders: Leadership, Culture, Business, Operations, Technology and Geography. Particularly encouraging for an industry that has experienced such turmoil is the fact roughly one-third (31%) of respondents indicate that they have been in the industry for more than four years. Moreover three-quarters (76%) indicate that they, or their companies on their behalf, are investing in tools, training/coaching and other resources to improve performance.

****The complete 2012 Survey of Originator Opinions results can be viewed at

Market Analysis: Security Concerns About SaaS Persist

*Security Concerns About SaaS Persist*
**By Tony Garritano**

***As lenders embrace Software as a Service, security concerns arise. Is it safe? What about how it will protect sensitive information? The truth is that SaaS is safe. As proof, there are certificates that can ensure a level of security that all lenders should ask for. For example, PROGRESS has learned that IndiSoft, a technology development firm that provides software as a service (SaaS) solutions based on a collaborative rules-based workflow platform for the financial services industry, has achieved the ISO 27001:2005 Information Security Management System Standard. Here’s the scoop on this standard certificate:

****This certification verifies IndiSoft’s practices for software development, licensing as well as support services and will give its U.S. clients added assurance that they are working with a company that operates using well-established, reputable principles. The ISO 27001:2005 ISMS Standard is a series of documents established by the International Organization for Standardization (ISO), the world’s largest developer of international standards.

****“We have always believed in a process-driven approach, and this certification provides our clients with a level of assurance in our operations, as well as confidence in our existing systems and their alignment with international work practices and standards,” said Sanjeev Dahiwadkar, president and CEO of IndiSoft. “Our technology delivers transparency in auditing processes and ensures compliance for our clients. This accreditation is an acknowledgement of our systematic approach to managing their secure information.”

****ISO is a network of the national standards institutes for 162 countries and created the standard to set international requirements for quality management systems. Adopted today by more than 80 countries, the ISO /IEC 27001:2005 ISMS provides a management framework for continuing conformance to information security systems.

****So dot the Is and cross the Ts when looking into SaaS vendors, but don’t shy away from this delivery model, it could work for you.

Market Analysis: Another Great Story

*Another Great Story*
**By Tony Garritano**

***I like to spotlight companies in our space that are giving back. I think community service is important. This time PROGRESS in Lending has learned that Ellie Mae has said that its volunteer, employee-run community outreach program, EllieCares, continued to grow stronger in 2011 and will be expanded to its regional offices in 2012. Here’s the scoop:

****EllieCares is run entirely by Ellie Mae employee-volunteers. A committee of Ellie Mae employees selects both local and national organizations that will be beneficiaries of the employees’ fundraising and outreach activities. Ellie Mae supports EllieCares by giving employees time off with pay for participating in these volunteer activities and matching employee-raised contributions.

****Some of EllieCares’ initiatives in the past three years have included:

****>> Fulfilling the holiday wishes of needy children through the Family Giving Tree;

****>> Hosting the annual Ellie Mae Marketplace fundraiser for the Alameda County Community Food Bank, as well as supporting food drives and volunteer workdays during the year;

****>> Building homes with Habitat for Humanity East Bay;

****>> Helping to staff the Walk for Wishes fundraiser for the Make-A-Wish Foundation, Bay Area Chapter, in California;

****>> Preparing and serving meals to homeless and needy members of the community with City Team Oakland;

****>> Painting transitional housing for families for the Family Emergency Shelter Coalition;

****>> Giving blood donations to the American Red Cross Bay Area Chapter;

****>> Creating and selling earthquake-preparedness kits to raise money for the American Red Cross Haiti Relief and Development Fund.

****“Giving back is part of our heritage and our culture. Ellie Mae team members are passionate about helping people in need and making a difference in our community,” said Sig Anderman, Chief Executive Officer of Ellie Mae. “In the past few years, our volunteers have raised thousands of dollars for worthy charities and brightened the holidays for many children in our community. I am proud of the success of EllieCares and am excited to see it do even more in 2012.”

****Kudos to Ellie Mae and others in our space that take the time to give back.