Mortgage Lending Is Suffering From Paradigm Paralysis

In researching material for topics of discussion I came across a phrase that really hit the proverbial “nail on the head.” This phrase was “paradigm paralysis.” What you ask, is paradigm paralysis and why was it such a revelation? The answer to those questions are simple.

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Paradigm paralysis is the condition where something, where an individual, business or culture, has an expectation of about how something should be done and something new is introduced that falls outside that pattern, we find it hard to see or accept. In other words, the actions that need to be taken to change accepted patterns are just not taken, even if these actions would produce a better result. Be it individuals, businesses or cultures, we are paralyzed. The reason it struck me as so significant is that this is what has occurred in the mortgage industry and most particularly in the adaptation of operational risk and the redirection of the quality control process.

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The basic mortgage process of evaluating the borrowers and collateral has been around since its inception in the 1930s. However, over the past thirty-five to forty years, it has expanded significantly with the focus on marketing these loan products through capital markets. In 1985, Fannie Mae introduced the first quality control requirements for lenders selling loans to them. The other agencies quickly followed. However, the paradigm they followed when doing so was one of loan inspections with reports providing a data dump that was supposed to help management resolve loan level problems.

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Because of the mortgage crisis that occurred in 2008 and the subsequent regulatory explosion, it was anticipated by many that we would see significant changes in the mortgage lending process. While there has been an escalation of technological support since that time, changes to help address some of the regulatory issues and some minor adjustments to industry processes, including quality control, there has not been any real progress in any of the process paradigms.

Of particular interest to me is the critical changes that are needed in QC. Without a doubt, the quality control standards in place during the build up to the crisis were a critical and significant factor in the collapse that followed. This was not because they weren’t followed but because they were inadequate and antiquated. Yet during this same time period, other industries in the US and around the world were implementing new quality control standards as part of an overall operational risk program. Once implemented, these programs focus on operational process analysis and provide a method to effectively price for the risk of poor controls and processes.

So, why hasn’t the industry moved in this direction? Unfortunately, we continue to have paradigm paralysis and have failed to make some progress in this critical segment of mortgage lending. Until such time as lenders are willing to take responsibility for the management, control and monitoring of the products they produce, the industry will continue to suffer. One can only hope that leaders of the industry will become brave enough to challenge this agency-caused paralysis and make a change for the better.

About The Author

Rebecca Walzak
rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.

Putting The Interest Rate Hike Into Perspective

Should the interest rate hike be a concern for the mortgage industry? Will the demand from prospective homebuyers be decimated? The short answer is no.

Like most veterans of the mortgage industry, I remember when mortgage rates reached 18 percent. Today, that’s an APR on a credit card – not the interest on a mortgage payment.

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Earlier in the year it was reported that the median price of a house in 27 major metro areas in the U.S. was $222,700. Even if a buyer puts 20 percent down, an 18 percent interest rate means that the loan costs more than $965,000 over 30 years. Thankfully, this is no longer the case. As I write this, the average fixed-rate on a 30-year mortgage is 3.43 percent, which means that today’s homebuyer would pay less than $286,000 over the life of the loan – that’s a savings of more than $680,000. So a slight rate increase will not be detrimental for lenders. Consumers will still be purchasing homes; they’ll just adjust their budgets accordingly. It will be up to lenders to adjust and cater to their needs.

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All things considered, the industry is doing very well. The industry has been very effective at increasing the quality of loans within the past few years. With new regulatory standards -and most lenders’ ability to now adjust and appropriately respond to evolving compliance requirements – delinquency and default rates are at historic lows. Equifax recently reported that as of June 2016, the first mortgage write-off rate in the U.S. was 3.3 basis points of outstanding balances, while the total number of first mortgage defaults was 17,909, the lowest since January 2007.

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While the industry will not suffer dramatically from a rate hike, the cost of mortgages will certainly increase; therefore, the emphasis should shift toward making sure borrowers are provided with personalized service, a powerful differentiator that will grow your business. Thankfully, we live in an era in which technology is evolving faster than ever and new tools have made the home search and purchase process easier than ever for borrowers. Digital and mobile apps provide the most up-to-date, detailed information on a property, such as days-on-market, square footage, price, age, structure, associated school districts, interior and exterior layout, utility information and more. The borrower is engaged earlier than ever and is coming to the table with greater expectations of convenience and service. And the ability to meet these expectations requires that lenders’ systems are optimized to handle the workload. LOS technology workflows need to be configured so that the process is smooth, timely and compliant. There is always room for improvement and lenders should evaluate where systems can be tweaked to minimize timeframes. With ongoing improvements in operations, you can effectively manage the pipeline growth provided by your marketing department.

In addition to lenders taking a proactive approach to the rate hike, they shouldn’t ignore that the sentiment of home buyers continues trending upwards. In September, the Fannie Mae Home Purchase Index in July-August was up 4.2 points over the same time period in 2015. Doug Duncan, SVP and chief economist at Fannie Mae, said the return to a slight upward trend in the HPSI is in line with Fannie Mae’s forecast, which calls for a four percent growth in home sales this year “to the best level since 2006 and continued improvement for 2017.”

Ultimately, synergy between departments is going to dictate a lender’s success. From a marketing standpoint, the ability to effectively communicate and connect with a diverse population of potential homebuyers of all ages across digital and traditional channels will help you identify the best path to homeownership for everyone – something that is fundamental to helping borrowers achieve debt-free homeownership. Operationally, success relies on the deployment and integration of systems that streamline the origination process and facilitate ongoing relationships. And together, these two components must work in tandem to maximize the quality and volume of business.

About The Author

Matt Clarke
Matt Clarke is COO and CFO for Brentwood-Tenn. based Churchill Mortgage Corporation, a leader in the mortgage industry providing conventional, FHA, VA and USDA residential mortgages across 33 states and the District of Columbia.

Foreclosure Forecast: Where Do We Go From Here?

While recent data indicates a decreasing number of foreclosures, these reports only reveal part of the story. The industry continues to see a high volume of properties in the pre-foreclosure stage; and for this reason, we’ve seen a renewed emphasis on loss mitigation strategies. It is yet to be determined whether foreclosure is imminent for these properties, or whether home retention strategies will keep a greater number of borrowers in their homes.

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We saw loss mitigation come to the forefront in late August 2016, when Fannie Mae announced its streamlined processes for services, designed to help borrowers retain their homes. Although the deadline to implement this new process is Dec. 1, 2016, servicers should be motivated to change their procedures even before this date. While yes, Fannie Mae’s guidance represents yet another regulatory change for servicers, this revised process will very likely ease other regulatory burdens; in particular, upholding regulations associated with maintaining foreclosed and vacant properties has come at a growing cost for servicers, underscoring just one of the reasons successful loss mitigation creates a true win-win.

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The Impact on Renting

Putting home retention options in easier reach could also have a considerable impact on the rental market. When borrowers stay in their homes, the inventory of properties for foreign investors to purchase and turn into rentals will decline. As will the demand for single-family rental housing, which coupled with foreclosure rates has been driving up cost of renting. Simply put: if more borrowers stay in their homes, and less homes become rental units, we just might see the rental rates normalize and even preserve and grow the nation’s homeownership.

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Foreclosure Avoidance: Lessons Learned

In July 2016, The U.S. Department of Treasury, the U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency (FHFA) issued a whitepaper outlining lessons learned from foreclosure prevention recovery programs thus far and offering guidance for the future of loss mitigation programs. The five principles offered in the paper – accessibility, affordability, sustainability, transparency and accountability – really hit the nail on the head. Servicers must be equipped to deliver on these business philosophies as a foundation for approaching new loss mitigation programs and processes. Whether this means instituting new policies or assessing partnerships, servicers need to evaluate their ability to facilitate successful loss mitigation strategies, knowing that the stakes remain high for all parties involved.

Are you leaning on the right partners and technologies that make transparency and accountability inherent in your processes? Are there established workflows and methods of communication in place to ensure a smooth transaction and to keep homeowners involved and engaged? Accounting for these principles will help servicers optimize their loss mitigation efforts, especially given today’s pre-foreclosure inventory and its potential widespread impact.

Also on the minds of industry stakeholders is the upcoming election. Regardless of who wins the presidency in November, as current policies run their course and new ones take effect, it will be difficult to unravel the properties in pre-foreclosure that stand today. Much remains to be seen, and while it’s nearly impossible to predict just how the country’s decision in November will impact housing and the future of foreclosures, we can definitely say it will play a role.

While we wait for some of these unknowns to come to fruition, servicers should take a close look at their loss mitigation strategies and ask “What’s working? What’s not? What can be improved upon?” Consider how processes in place and established relationships each contribute to the success or the failure of your loss mitigation initiatives. Ensure the options and services you provide borrowers is supported by equally strong technology to guide and control transactions in a way that promotes consistency, speed and above all, accuracy. We have reached a critical point; how servicers respond to this current volume of pre-foreclosures will impact countless borrowers and the housing market as a whole for years to come. By committing to the right procedures and technology, servicers can be confident that this impact will be a positive one.

About The Author

Keith Guenther
Keith Guenther is CEO of Lake Forest, Calif.-based USRES, Inc. and its wholly owned subsidiary, RES.NET, Inc. Guenther oversees all day-to-day activities and drives the strategic and technological initiatives for the companies. Since founding USRES is 1991, Guenther has been instrumental in building steady growth by identifying and maintaining key partnerships and client relationships. Guenther began his career in real estate as an agent in the 1980s. Prior to establishing USRES, he held several executive-level positions at Tarbell Real Estate, California’s largest family owned real estate company. This background has contributed greatly to his understanding of the market and awareness of customers’ unique challenges and needs.

A New Mindset Is Really Needed

There’s a lot of talk about reaching new borrowers. The industry is very aware of the fact that we are in a purchase market where interest rates are probably going to go up. So, what should a lender do? First, they have to reach new audiences. What does that mean? It means that mortgage lenders have to speak to young people in a meaningful way. Everybody knows this, but they don’t seem to know how to do this. I don’t get that. I don’t understand why the mortgage industry seems unable to change tactics.

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Sadly though, the problem of being unable or unwilling to change is not a new one for the mortgage industry. For example, I was one of those people that hailed the coming of TRID. I thought this new regulation would prompt mortgage lenders to look hard at the whole mortgage process and change it for the better. Needless to say, that didn’t happen. TRID was viewed as a hassle and an inconvenience. The result of this attitude was that too many lenders viewed this as merely an issue of new forms, and not a way to really rethink and improve their own processes.

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But I digress. If lenders truly want to know more about Millennials and how to market to them, they need to look at the research. Here’s a look at vital stats about this demographic—and info about how best to reach it.

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Some 82% of Millennials (people age 18-29) interact with brands or retailers on social media, where 49% follow their favorite brands or retailers, according to the following USC Dornsife infographic.

To reach Millennials, marketers should consider optimizing mobile. “Mobile is the best way to reach Millennials,” states the infographic. “They have the highest rate of ownership of smartphones of all generations.” And I can tell you, this trend is not going away. My sons have smartphones that they use in ways that I never dreamed possible. To me it’s a phone, but not to them.

When I was their age I didn’t have a smartphone. There weren’t any smartphones. It was truly a different time. But that’s the point. It is a different time that requires lenders to do things a little differently.

Personalization also matters to this age group: “85% of Millennials are more likely to make a purchase if it is personalized to their interests, both in store and with digital displays,” according to the new research that I came across. It would be beneficial if mortgage lenders would view this new generation as a business opportunity. Here are some ways that they might reach them:

psychology-of-marketing-to-millennials-infographic

About The Author

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.

Home Flipping Hits Some Milestones

ATTOM Data Solutions released its Q2 2016 U.S. Home Flipping Report, which shows a total of 51,434 U.S. single family home and condo sales were completed flips in the second quarter of 2016, up 14 percent from the previous quarter and up 3 percent from a year ago to the highest number of home flips since Q2 2010 — a six-year high.

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For the report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties accounting for more than 80 percent of the U.S. population (see full methodology below).

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Homes flipped in Q2 2016 accounted for 5.5 percent of all single family and condo sales during the quarter, down from 6.7 percent of all sales in the first quarter but up from 5.4 percent of all sales in Q2 2015.

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A total of 39,775 investors (including both individuals and institutions) completed at least one home flip in Q2 2016, the highest number of home flippers since Q2 2007 — a nine-year high.

“Home flipping is becoming more accessible for smaller operators thanks to an increasingly competitive lending environment with more loan options for real estate investors, who are also benefitting from the historically low mortgage interest rates,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “That favorable lending environment for flippers has helped to fuel the recent flipping frenzy we’ve seen over the past five quarters.

“We’re starting to see home flipping hit some milestones not seen since prior to the financial crisis, which is somewhat concerning, but there are a couple of important differences in the home flipping of 2016 compared to 2006 when home flipping peaked during the last housing boom,” Blomquist continued. “First, home flippers are realizing a much bigger gross ROI in 2016, averaging 49 percent in the first two quarters compared to an average gross ROI of just 27 percent in 2006. Second, while an increasing number of flippers are financing their purchases, more than two-thirds are still using cash to purchase compared to about one-third using cash to purchase back in 2006.”

Of the 51,434 homes flipped in the second quarter, 68.3 percent were purchased with cash by the flipper, down from 71.1 percent in the previous quarter and down from 69.6 percent in Q2 2015 to the lowest level since Q3 2008 — a nearly eight-year low.

“The single family real estate sector is becoming more institutional, which means that more financing is available and more attractive,” said Varun V. Pathria, CEO at Asset Avenue, a company that provides investor rehab, bridge and rental loans. “The entrepreneurs are also becoming savvier and as a result are looking to leverage their capital more. There continues to be a fringe group of people who enter and exit the sector based upon opportunity and those people are hard to predict but generally look to take maximum leverage.”

Pathria noted that 79 percent of the rehab loans Asset Avenue has originated so far in 2016 have been purchase loans while the remaining 21 percent have been refinance — typically an investor who purchases with cash at a foreclosure auction or some other auction and subsequently finances the property.

infographic_homeflip

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Choosing The Right Appraiser

Credible, accurate appraisals will make all the difference in your deals, accelerating smooth closings and making borrowers happy. If the appraised value on a subject property is too low, most deals are dead in their tracks, and many lenders tell me they’re often left holding the bag. Borrowers tend to chalk up the entire experience to the lender, regardless of the specifics of the deal.

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To keep your deals on track and your borrowers happy, there are many ways you can proactively control the appraisal process without choosing the specific appraiser so you’re still in full compliance with the law.

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Getting it right and avoiding the headaches and lost deals all starts at the beginning of the process, not at the end. Instead of arguing with appraisers after the report is delivered, which rarely produces any results, ensure you have a process in place to choose the best appraiser for each subject property. There are several factors to consider when choosing the appraiser, but here are a five that many lenders overlook:

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Are all of your minimum requirements covered? Often, an appraisal will be underway or even completed before a lender knows that the particular appraiser chosen for the assignment doesn’t have the specific designation required, their license has lapsed or they don’t carry your minimum requirement of errors and omissions insurance. It’s also not uncommon to find that the appraiser you’ve assigned is on your investor’s “do not use list”. It’s critical to keep a current appraiser profile for everyone on your appraisal panel so you know exactly who is eligible for any particular assignment. With a live data feed of appraiser profile information, you can eliminate the risk of placing the order with an ineligible appraiser, which wastes time, money, and risks damaging your relationship with that vendor.

Is the appraiser an expert on this neighborhood? Real estate markets are hyper-local and it’s important to select an appraiser that knows the area extremely well. You can prefer or require the appraiser be located within a certain proximity of the subject property to be appraised, and you can check your past appraisal orders in the area and see which appraisers have done the most work there for you.

What’s your institution’s past experience with this appraiser? An internal vendor rating system can give you tremendous insight into an appraiser’s capabilities and reputation. After every appraisal is assigned and after every report is delivered, take a few moments to rate your appraiser so you can share the intelligence across your organization. If more than one party inside your institution is ordering appraisals, an internal rating system is the only way to leverage your institution’s shared experience to ensure you’re getting the best vendor for the job.

Do you have performance statistics for your appraisers? It’s simple and imperative to track the performance of your vendors based on objective measurements. What percentage of the time do they complete the appraisal on time and deliver when promised? How often do they let appraisal orders you send them just sit in the inbox, without acknowledging them? It’s important to track rework rates, as well. How often do you have to ask them for additional information, revisions or clarification after they’ve delivered a report? Those revision requests and the accompanying phone tag and emails are often frustrating for all parties involved, and the back and forth can take weeks. If you’re tracking vendor performance proactively, you’re far less likely to send assignments to appraisers you’ve had issues with in the past.

Can you tailor the appraiser’s eligibility for your orders? It’s very common for lenders to prefer to use specific appraisers for certain property types (jumbo, desk reviews, etc.). You need a way to track your preferences for each vendor so that you’re proactively deciding which assignments they can receive from you. For example, an appraiser may cover 13 counties, but you may prefer they only do assignments in 5 of those counties for you. An appraiser may offer several different types of reports, but you may only want to use them for condos. Make sure that your internal appraiser selection system allows you to tailor the vendor’s eligibility for your orders so that you’re getting exactly what you want from each appraiser.

If your appraiser selection system is working well, you can avoid many appraisal headaches. Remember, the appraiser selection requirements prohibit anyone involved in production from choosing the specific appraiser, but you still have tremendous power in determining the pool of appraisers from which you select for each assignment. Define your selection process up front and you can dramatically reduce your appraisal frustrations down the road.

About The Author

Patrick Scott
Patrick Scott is a Senior Sales Consultant for Mercury Network, a vendor management platform used by more than 700 lenders and AMCs. His appraisal management and compliance expertise spans smaller community banks and credit unions to the largest lenders and AMCs in the country. He consults with Mercury Network clients on appraisal workflow, compliance, and efficiency issues and he can be reached at Patrick.Scott@MercuryVMP.com.

Pixelation Nation

Digital photography was invented 43 years ago. Today, we have grown so accustomed to taking photos with digital cameras – including our cell phones – that we no longer think twice about this technology. Sure, most of us grew up taking rolls of film to the store to be developed, but would you really trade the immediacy we have today for film? For most of us, the answer is “no way.”

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The all-digital mortgage is similar to digital photography. It has gone from being a novel concept – something for lenders to strive for – to being something we hear about all the time. The need for all-digital-everything in mortgages has been driven by a number of considerations, including consumer demand for more timely and efficient interactions, complex compliance requirements, and a need to expedite lending activities. Non-bank lenders add to this mix with non-traditional lending practices and different risk profiles, creating a hyper-competitive lending environment.

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In light of all of these factors, tack-on solutions or limited technology that only supports digital disclosures is just no longer going to cut it. As we adapt to the needs of today’s borrowers, we believe that embracing the all-digital mortgage experience is the best option for lenders to ensure that they have a lending platform that will support their future activities. Just as camera film has become all but obsolete, so too will be paper-based mortgage processes. Here’s how you can ensure you are at the forefront of this part of our digital revolution.

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As mentioned, digital disclosures have long been an accepted first step in the digital revolution. Electronic signatures on early and upfront disclosures carried low risk and were simply implemented, and the options and flavors of eSign are numerous. However, lenders are realizing – and consumers are demanding – that you can’t just offer digital disclosures and then revert to paper for closing to realize the benefits of the digital mortgage.

There are two reasons for this. First, because of increased regulations that require compliance checks and procedural validations, lenders today automatically face higher costs per loan. And while increased costs can be mitigated with procedure redesign and staff training, lenders can only retrain so much without having to rely on technology to go further. Second, many of today’s mortgage borrowers seek automated, efficient financial solutions that they can control at the time and place of their choosing. While digitizing disclosures is a great start, today’s borrowers demand more and will go where they can find that all-digital experience.

That brings us to eClosing. The digital camera revolution took nearly fifteen years after its invention before consumers had a viable product they could buy. Similarly, the industry “standard” over the past decade for eClosing required lenders and platforms to dig deep. Their options included:

>> Investing in product or platform development or in a deep technology integration that had little to no general application to the process

>> Engaging in relationship-building and process validation with MERS and with Fannie Mae

>> Building, buying, or partnering with a solution that generates a complex technical version of the note, and acquiring an electronic vault in which to keep the records.

In the cold calculus of cost/benefit, lenders often could not make the conversion-to-payoff based on the large investment required. Costs to implement and maintain could not justify the potential or perceived benefits in consumer efficiency and/or backend reductions in cost, time, or processes. Faced with these tack-on approaches, many lenders waited for better options to come along.

Fortunately, just as digital cameras now are ubiquitous, all-encompassing digital mortgage solutions have proliferated, as well. Digital experts in the financial services industry have begun banding together to create fully-integrated solutions for lenders of all sizes. Lenders can now adopt the complex underlying technology for eNotes without the heavy investment in research, development, or infrastructure. With the availability of these solutions, consumers will begin demanding all-digital mortgages exclusively. Paper-based mortgage processes, while already on the way out, will hopefully become completely obsolete.

That brings us to the key question for lenders: Where are you on your digital mortgage journey? The movers and shakers in the industry are already providing borrowers with an all-digital mortgage origination experience. Taking the next step today can help meet borrower demand tomorrow.

About The Author

Jim Rosen
Jim Rosen is Document Center Product Manager for Mortgage Cadence, an Accenture Company. As the Document Center Product Manager for Mortgage Cadence, Jim Rosen oversees a team of seasoned professionals, offering dynamic document preparation services to lenders on the Mortgage Cadence platforms and independent, directly integrated lenders across the lending spectrum. The Document Center solution supports automated, compliant document preparation for residential mortgage origination customers throughout the mortgage lifecycle. Additionally, the Document Center extends document preparation to include distribution, electronic signature and e-closing integrations that enhance and drive efficient processes for mortgage lenders. Jim holds a bachelor’s degree from the University of Colorado and has served in various capacities in the mortgage services industry for over 17 years with particular depth and experience around residential mortgage document preparation.

Trust Matters

This year the Presidential Election is the major story. And, in my opinion, the state of play is very sad. Significant majorities of registered voters have an equally unfavorable opinion of both major party presidential candidates, according to a new survey.

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In total, 59% of registered voters say their opinion of Clinton is unfavorable, according to a poll put out by the Washington Post/ABC News.

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Those numbers put Clinton on equal footing with Donald Trump, who also faces a daunting favorability deficit. Trump is viewed unfavorably by 60% of registered voters according to the poll.

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What does this have to do with the mortgage industry? It’s crazy to say but while these two, Clinton and Trump, were successful in getting their party nomination, neither would be able to maintain long term success in the mortgage industry. Why do I say that? Because in our industry trust matters. Relationships matter. If you want to get ahead you have to build a solid reputation.

So, how do you do that these days? Jon Gordon’s best-selling books and talks have inspired readers and audiences around the world. Numerous NFL, NBA, MLB coaches and teams, Fortune 500 companies, school districts, hospitals and non-profits have put his principles to the test. Here are 11 tips that he has for companies to build trust and capture market share as a result:

1.) Say what you are going to do and then do what you say!

2.) Communicate, communicate, communicate. Frequent, honest communication builds trust. Poor communication is one of the key reasons marriages and work relationships fall apart.

3.) Trust is built one day, one interaction at a time, and yet it can be lost in a moment because of one poor decision. Make the right decision.

4.) Value long-term relationships more than short-term success.

5.) Sell without selling out. Focus more on your core principles and customer loyalty than short-term commissions and profits.

6.) Trust generates commitment; commitment fosters teamwork; and teamwork delivers results. When people trust their team members they not only work harder, but they work harder for the good of the team.

7.) Be honest! My mother always told me to tell the truth. She would say, “If you lie to me then we can’t be a strong family. So don’t ever lie to me even if the news isn’t good.”

8.) Become a coach. Coach your customers. Coach your team at work. Guide people, help them be better and you will earn their trust.

9.) Show people you care about them. When people know you care about their interests as much as your own they will trust you. If they know you are out for yourself, their internal alarm sounds and they will say to themselves “watch out for that person.”

10.) Always do the right thing. We trust those who live, walk and work with integrity.

11.) When you don’t do the right thing, admit it. Be transparent, authentic and willing to share your mistakes and faults. When you are vulnerable and have nothing to hide you radiate trust.

Let’s lead by example. Do what you can to build trust and your business will thrive.

About The Author

Michael Hammond
Michael Hammond is chief strategy officer at PROGRESS in Lending Association and is the founder and president of NexLevel Advisors. They provide solutions in business development, strategic selling, marketing, public relations and social media. He has close to two decades of leadership, management, marketing, sales and technical product experience. Michael held prior executive positions such as CEO, CMO, VP of Business Strategy, Director of Sales and Marketing and Director of Marketing for a number of leading companies. He is also only one of about 60 individuals to earn the Certified Mortgage Technologist (CMT) designation. Michael can be contacted via e-mail at mhammond@nexleveladvisors.com.

Appraisals: Saving Time With The Obvious

Thanks to the Internet, information is the new speeding bullet. From cat videos to important news, information is passed among us—crossing state lines, time zones and oceans—almost instantaneously. Immediate is the new normal in most areas of our lives. We just don’t like to wait. That said, this new normal doesn’t seem to apply in certain segments of the mortgage industry, and I’m wondering why. More specifically, I’m talking about the collateral space, because that is where I live and breathe.

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It can take a week or more from the time a lender orders an appraisal, to the time that appraisal arrives in underwriting-ready condition. In the age of technology, where progress is almost synonymous with faster, why haven’t these turn times improved over the last decade or so? Quality is one factor. We’re not willing to sacrifice quality for speed. Nor should we. But isn’t there a way to preserve quality and enhance speed or—dare I say?—elevate both in one fell swoop? I say yes, and all it takes is leveraging the most basic capabilities of technology.

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The appraisal process is one of the most, if not the most, time consuming activities in the mortgage cycle. I’m not suggesting the notion of instantaneous appraisals. I am suggesting, however, that lenders, AMCs and appraisers take a closer look at how technology can work for them. I think they’ll be pleasantly surprised by how much they can cut appraisal turn times without sacrificing quality. In fact, I believe they could actually increase quality in the process.

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Let’s take a look at connectivity. These days, the shortest distance between two points is one mouse click. The reason information can be passed at such quick speeds, and to exponentially growing numbers of people, is because people are connecting with each other. They’re sharing a platform. Sure, some of us are sending the information via email. But by and large, most of us are getting this viral information via social media, like Facebook and Twitter. In other words, we aren’t waiting to receive something by email. We go to our shared platforms where our friends can post something once and share it with hundreds or thousands of people.

The question that I ask myself is why, if sharing information is so easy—if it can take mere days for the entire country to be asking whether a dress is blue or beige—is it so difficult for the mortgage industry to share information? When it comes to the appraisal process, could you imagine how much time it would save if lenders, AMCs and appraisers could share the same platform? They’d be able to access the exact same information the sender is evaluating.

We’ve seen it proven, time and again, that sharing access to the same information increases speed, efficiency and accuracy. When sharing information manually, even if it’s through electronic means, there’s a lot of rekeying and explaining—two activities that not only take time, but also significantly increase the margin of error. By sharing a platform, there would be no rekeying, and mistakes would be cut down drastically—especially those silly ones that waste so much time for no reason at all. There would be no misinterpretations and no sending of documents back and forth. Imagine how many error-based delays could be avoided.

It’s interesting that, perhaps because the appraisal process is such an intricate one, we tend to view technology in this segment as being a tool for tasks like enhancing workflow, increasing quality and analyzing data. But we should remember that functions like facilitating instantaneous communication and sharing information technology through a common platform are activities that technology happens to do extremely well, and shouldn’t be dismissed.

In today’s world, it’s amazing to me that lenders, AMCs and appraisers aren’t already utilizing a common QC platform, where they could share information on an as-needed basis. An underwriter or reviewer could make requests on the QC report, and have an alert automatically the appraiser, alerting him or her that an appraisal needs additional information. Then the appraiser could log on to the system, access certain designated fields on that exact same report, and make the corrections or explanations, and of course, have an alert automatically sent to the underwriter or reviewer, as soon as the revision has been made.

It’s almost funny that this sounds so groundbreaking, when we’ve all been using technology that follows this exact premise for years. In fact, it would be funny were it not for all of the time and money companies are losing, simply because they’re overlooking the obvious.

The next time you pass along that video that inspired you so much, you may want to ask yourself why you’re not taking full advantage of the speed and reach of the internet in your appraisal process.

About The Author

Arturo Garcia
Arturo Garcia is COO and co-founder of Platinum Data Solutions, a Mercury Network company pioneering valuation data and analytics for the mortgage industry. He’s an expert in collateral technology, and has over 15 years of experience helping companies to use AVMs to enhance compliance, quality and bottom line profitability.