A New Way To Communicate

In real estate, communication is the most important part of the relationship between an agent and the client. Understanding “how” to communicate is daunting. Rapid-fire methods including email, text messaging and social media channels are preferred methods of contact for most Millennials, Gen Xers and even Baby Boomers these days. In order to help REALTORS get up to speed on the latest trends in social media, Berkshire Hathaway HomeServices New England and Westchester Properties has scheduled “Social Media Bootcamps” taking place this fall to teach best practices in Facebook, Instagram, LinkedIn and Snapchat. The newest member to the group – Snapchat – needs a class all on its own and with it, a real estate specific guide was created to get their agents engaging and ‘snapping’ with clients.

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Like Real Estate, Snapchat is a visual entity. Snapchat is used to send photos and videos via a downloaded app for smartphones. REALTORS who use Snapchat can record videos when previewing a home to create a virtual open house, showing off unique aspects of a listing while using text to convey a short description. The use of Geofilters adds to the diverse features Snapchat has to offer by identifying where a video or photo was taken within a geographical area using the phone’s GPS. As the app’s consumer base expands, so does its value as a convenient marketing tool for businesses to promote and communicate directly to its users.

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“Snapchat is an innovative tool for REALTORS,” stated Candace Adams, President and CEO of Berkshire Hathaway HomeServices New England and Westchester Properties. “It visually tells a story and allows for more personal engagement with clients. Berkshire Hathaway HomeServices New England and Westchester Properties understands the importance of social media in the digital age. It is essential to reach clients where they are already looking.”

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Even more valuable than Snapping listings, Snapchat lets REALTORS be more personal. It’s a great way to show clients how homes are marketed for today’s modern era and have fun showcasing their personality.

In an article created by eMarketer, they project “58.6 million US consumers will use Snapchat at least once per month in 2016. eMarketer’s user estimate would represent 28.3% of US smartphone users and 18.1% of the US population.”

By adapting new technology trends early, Berkshire Hathaway HomeServices New England and Westchester Properties REALTORS will benefit greatly by acclimatizing quickly in an ever changing industry. They will engage with clients, provide valuable information and promote their expertise. Why do I bring this up? Because mortgage lenders should learn from their REALTOR friends and use this same technology to improve the mortgage process and better communicate with borrowers.

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Guess What’s New

Hey, guess what’s new? According to Richard Parsons in his August 17th commentary, there is a boom in bank lending. Banks such as Suntrust and JPMorgan Chase are experiencing increases ranging from 15.5% to 23%. Likewise, real estate values are going up and up. The trifecta of this development is of course the re-emergence of loan products that we never thought we would see again.

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What in the world is driving these trends? Well for one thing the inventory of previously owned homes is still rather low while builders are introducing new community developments in all areas of the country. For another, there are now down payment assistance programs either already available or under discussion and banks and investors are hungry for more yield in this continuing low interest rate environment.

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The primary result of all this news is that banks and investors are expanding their risk appetites, and because they believe that loan quality is once again healthy, they are willing to add more risk to their portfolios. This is evidenced by the increasing volumes of lending activity. Of course, the lending activity reflected in the bank’s number do not necessarily include those loans originated and funded by non-bank lenders which would increase those numbers even more. So should lenders break out the streamers and champagne? Are we back to the early 2000s with another round of increased borrowing just around the corner?

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Whoa! Wait a minute. Aren’t we still suffering under the regulations that were piled on after the collapse of 2008? While the obvious answer to that is a qualified yes, in reality the industry is starting to realize the opportunities available from these reversals of fortune. The question is not should we take advantage of these opportunities, but have we learned enough to avoid the same cataclysmic result. Let’s take a look at the issues.

Credit risk, in the form of both underwriting policy and product development prior to the crash, was expanding to include some very hazardous policies. Stated income loans had been offered as early as 1988 to employees of companies that moved and were eligible for their relocation programs. In less than 12 months it became evident that even these stellar borrowers were having difficulty making payments on stated income loans. Yet any additional reviews of the potential for inaccurate income to be used in these loans was either never done or not published. Furthermore, credit criteria in the form of debt-to-income ratios were also pushed ever higher without any acknowledged analysis taking place. Now of course, the ATR and QRM requirements are in place for federally regulated institutions but what about those who are not?

Regardless of these issues, the most significant process failure prior to the meltdown was Quality Control. If nothing else was gained from this catastrophe we learned that the program dictated by the agencies was less than useless. Even though the steps were followed, lawsuits focused on this failure has run into the billions. Yet the agencies have done little to change the requirements despite the fanfare surrounding the new dictates.

So, now we find ourselves in an environment with rising home prices, low interest rates and banks taking on more risk. History tells us this does not look good. It would wise for all of us to remember, “those who fail to learn from history are doomed to repeat it.”

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LinkedIn As A Business Generator

People think of LinkedIn as just social media, but it’s not. LinkedIn can help you grow your mortgage business if you use it wisely. You have only a few seconds to make a good impression with your LinkedIn profile. Here’s how to create a profile that immediately captivates your audience.

Be consistent with your name, suggests Quill. “Match your LinkedIn account name with the name you use on your business cards, email signature, and resume.”

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Also, add a professional photo. “Your photo should reflect your current age and should be a head-on picture of mostly just your face without a very distracting background,” states Quill.

Moreover, use simple language and avoid buzzwords. Don’t describe yourself as a ninja, wizard, or guru. Good words to use include “organizational,” “motivated,” “dynamic,” and “extensive experience.”

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Forbes advises that you join groups that will let you connect with people who are in your target audience but are not contacts. Being part of the group gives you permission to reach out to them and invite them to join your network. You don’t need to upgrade to Premium to do so.

In order to be successful on LinkedIn you have to know the top five strengths for which you want to be recognized and use them in your profile – repeatedly. If your top skill is project management, describe your project management proficiency in your summary as well as in multiple experience descriptions. This will help the right audience find you.

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How do you create this content? Reuse and repurpose the content you already have available. This amplifies your message and delivers brand consistency. Communicating different forms of the same content in distinctive ways helps reinforce your messages within your brand community. Convert your Blog posts into activity updates and embed whitepapers and articles in your profile.

Also, ignore LinkedIn’s advice to only accept connection requests from people you know. That helps sell Premium, but it doesn’t help you get found. LinkedIn’s search algorithm favors those who are in your network. That means when people are looking for what you have to offer, the results of their searches are displayed with 1st level connections first, then 2nd level connections and so on.

You also need to integrate your point of view (POV) into your summary and experience where appropriate. Join groups where you can share your POV as it relates to your area of expertise. It’s a great way to distinguish yourself from competitors.

Think of it this way: Your profile is not a resume or CV. Write as if you are having a conversation with someone. Inject your personality. Let people know your values and passions. In your summary, discuss what you do outside of work. You want people to want to know you.

And don’t be afraid to ask your contacts to endorse you for your top skills. Having the highest number of endorsements for your signature strengths will influence those who are looking at your profile. Have the courage to delete or reject the endorsements that aren’t central to how you want to be known.

On the same topic, only give recommendations and endorsements to those whom you genuinely admire. When you recommend other people, their reputation is seen an extension of your values.

So, use LinkedIn to the fullest to grow your business.

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Originations Are On The Rise

The Data & Analytics division of Black Knight Financial Services, Inc. released its latest Mortgage Monitor Report, based on data as of the end of July 2016. This month, Black Knight looked at first-lien mortgage originations through Q2 2016. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, the data showed significant growth in origination volume; however, refinance volume was not as strong as the current low interest rate environment might suggest.

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“Mortgage originations posted their strongest quarter in three years in Q2 2016,” said Graboske. “In total, we saw $518 billion in first-lien mortgage originations in Q2, driven by a combination of continued purchase origination growth and refinance activity spurred by low interest rates. Interestingly however, with interest rates 15 basis points lower than in Q1, and even lower than in early 2015, refinance activity wasn’t nearly as strong as one might have expected. While purchase originations jumped more than 50 percent from Q1, refinances saw only an eight percent increase over that period, and were actually down from the same time last year, despite the number of potential refinance candidates outpacing 2015 by over one million in every month since March. That said, refinance lending has risen for three consecutive quarters and accounted for $221 billion in originations in Q2.

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“It was a particularly strong month for purchase originations, which made up 57 percent of all first-lien lending in the quarter,” Graboske continued. “At $297 billion, Q2 purchase originations marked the highest level – in terms of both volume and dollar amount – seen since 2007. Although the purchase lending credit box remains tight, there is increasing participation among ‘moderate’ credit borrowers as well. Two-thirds of Q2 purchase loans went to borrowers with credit scores of 740 or higher – on par with what we saw during the same period last year – but there was a 13 percent year-over-year increase in lending to borrowers with credit scores between 700 and 739. This segment has seen the highest rate of growth over the last three quarters, and now makes up 19 percent of all purchase originations. On the other end of the spectrum, sub-700 score borrowers now account for only 15 percent of originations, with less than five percent going to borrowers with scores of 660 or below. Both of these mark the lowest share of low credit purchase lending seen dating back to at least 2000.”

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Black Knight also looked at recent trends in distressed sale activity (REO and short sales), and found that such sales accounted for seven percent of all residential transactions in Q2 2016. Though this represented the lowest such share in nine years, it still remains more than twice the ‘normal’ market level of just over three percent. The majority of distressed sales taking place in the market today – roughly two-thirds – are REO sales. The average 21 percent discount purchasers are reaping on short sales is on the decline nationally, while the 27 percent REO discount is actually slightly deeper than it was a year ago. The trend toward deepening REO discounts is likely due to the geographic shift in transactions from areas where discounts are lower – such as Florida, with an average REO discount of 23 percent – to areas where they are steeper. The largest REO discounts over the past six months have been seen in the Northeast and Rust Belt states. Ohio leads the nation with a 44 percent average discount on an REO over a traditional sale, followed by New Hampshire and New York with 41 percent discounts. The smallest REO discounts were found in the Southwest, with Texas (14 percent) and Nevada (16 percent) seeing the lowest of all.

As was reported in Black Knight’s most recent First Look release, other key results include:
Total U.S. loan delinquency rate:  4.51%
Month-over-month change in delinquency rate:  4.78%
Total U.S. foreclosure pre-sale inventory rate:  1.09%
Month-over-month change in foreclosure pre-sale inventory rate: – 1.68%
States with highest percentage of non-current* loans:  MS, LA, NJ, WV, AL
States with lowest percentage of non-current* loans:  SD, MT, MN, CO, ND
States with highest percentage of seriously delinquent** loans: MS, LA, AL, AR, TN

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Consistency: The Father Of Longevity

The old maxim “necessity is the mother of invention” has long been used to describe change and innovation. Consistency can then be called the father of longevity as it is paramount to ensure that a company is around for the long haul.

We have witnessed several economic cycles and many companies come and go since we started in 1986. When we started TeleVoice, the average interest rate was close to 11 percent, cell phones were a rarity, serious computing still meant mainframes, and that whole Internet thing was still a few years off. Consolidation in the mortgage servicing industry had not begun, and there were hundreds of servicers managing relatively small portfolios.

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The regulatory environment also was very different 30 years ago. An entire alphabet soup of agencies and rules have since sprung up. Servicers operations a now dominated by considerations of CFPB, TRID, TCPA, RESPA, SPoC, TILA, UDAAP, HMDA and more.

Over the last three decades, the only real certainty has been change. Adapting to address inevitable changes has been the challenge for servicers and vendors alike.

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For a company to survive and thrive in this ever-changing industry, we have learned that we must be consistent. We must be consistent in our core principles and passionate about providing the very highest level of service to our clients. Here are a few guiding principles that have kept us on track and contributed to our longevity.

Strive to be a trusted partner to clients. Our clients face an array of challenges driven by market changes, customer expectations, portfolio growth, regulation and innovations in technology. Our role is to listen to their concerns and deliver recommendations tailored to their particular needs. That often requires the development of unique solutions, not just trying to use a standard application to address a very non-standard need.

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Provide over-the-top service in addition to top-tier products. Mortgage servicers rightfully expect dependable service from their vendors, but we have worked hard to develop a corporate culture of exceeding expectations. All team members understand that they are to go the extra mile to ensure that projects are completed on-time and any necessary resources are applied to promptly resolve support issues. The extra effort ensures better operations and builds lasting relationships.

Embrace change. Change is the reality of our lives, and consistency in our service to our clients requires that we not only acknowledge that truth, but that we build a culture that is quick to respond to change. To be of genuine value to our clients, we must adapt to their changing needs. A commitment to innovation makes it possible to ride the waves of economic and regulatory changes and survive when other are failing.

No one has a crystal ball, but it seems safe to say that the decades ahead will be filled with their own set of challenges. Whatever they may be, a steady and consistent business philosophy will be the key to long-term success.

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Convert More Customers

Follow these seven steps to consistently attract and convert more customers by building an automated marketing funnel.

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“Before you do anything else, get really specific on your solution and the audience it’s for,” suggests ELIV8 in the following infographic. “Otherwise, you’re doomed to fail before you even begin.”

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The next step is to choose your traffic source, such as paid ads, SEO, content marketing, social media, email marketing, and local search.

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The third step is to “create a highly specific, irresistible offer that you can give to people in exchange for their contact information,” states Eliv8. “Lead magnets are usually offered on landing pages that are optimized to convert even cold traffic.”

To find out the next steps in about building an automated marketing funnel, check out this infographic:


Don’t Be Passive About Risk

While extremely imperative to monitor and uphold, many institutions maintain a passive approach to operational risk. With increased regulatory changes, a difficult and confusing process continues to challenge us with many questions. What information do I have to monitor? How often must I review this information? Will my methods be successful in passing an audit? While most financial institutions find operational risk management to be a large burden, a centralized and intuitive platform will make the task far less daunting.

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Operational risk management involves the risks resulting from breakdowns in internal procedures, people and systems. As a whole this broadly defined topic seems over bearing but when narrowed down and broken up into sections we can grasp a better perspective. The important areas to focus on are vendor management, business continuity planning, and incident response. Most often, these three areas are treated separately and managed by different departments, but with the growing audit vulnerability due to increased regulations and more intensive exams, it is beneficial to treat them as one.

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Vendor management involves the process of monitoring critical vendors to ensure that your institution will not falter if there happens to be an external disruption in services. So what does happen if a vendor remains inoperable and your institution relies on that vendor to maintain critical business processes? Here is where vendor management runs head to head with business continuity planning. Information such as institutional resources, personnel, departments, critical processes, and vendors should be taken into consideration for both vendor management as well as business continuity planning. The best way to prevent complete failure is to prepare for the worst case scenarios. Disaster recovery tests should be performed internally between departments as well as externally involving vendors. Your vendor management program and business continuity planning program should unify to reflect this co-dependency.

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Naturally, most financial institutions utilize around one hundred outsourced vendors. As a result, a greater dependence on third party providers can lead to a larger cybersecurity risk. Your incident response policy should prepare your institution to take the correct steps to prepare and control an incidental breach. Most often a vendor could be involved in the situation which would require further monitoring and might even increase the overall vendor risk rating. All of which is important to track and mitigate, utilizing an effective operational risk management program involving both vendor management and incident response. An integrated program will facilitate the ease of sharing imperative information across all areas of operational risk.

The best solution is to maintain one centralized platform for operational risk management. Since all areas are tied together, the systems should allow for this tight integration using shared information. If your process is easily managed and allows for well integrated information, then the implementation and ongoing monitoring will no longer be a daunting task. You should be confident in your institution’s operational risk management process and the best way to get to there is to start recognizing and managing operational risk areas in a cohesive light.

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Decision 2016: SMART Docs and PDF Forms Vie for Lenders’ Vote

The November election is not the only choice lenders face as they make decisions regarding the future of the mortgage industry. As the legal obstacles to electronically-signed loan documents fall and more consumers demand electronic documents for their home-buying process, lenders must evaluate and decide which of the two formats best serve their needs.

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On one side is the dynamic data-driven Securable, Manageable, Archiveable, Retrievable and Transferable document (MISMO SMART Doc). On the other side is the Adobe Portable Document Format (PDF).

Which format will win the hearts and implementations of lenders everywhere? While it’s too soon to know for sure, there are some key differences between the formats lenders should know.

Understand the Issues – What is Different Between the Formats?

SMART Docs and PDF-based documents both reach the same outcome – a legally binding loan document. However, each format uses a different technology and provides different benefits to the end user.

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From a technology standpoint, an electronically signed SMART Doc is a single electronic document with five sections. These sections are XML-based and the creation, viewing, signing and storage are all typically completed in a Web-based environment.

PDF Documents on the other hand, are often created in another application and converted to the PDF format which is then viewed within a Web browser or through stand-alone utilities like Adobe Reader.

While there are significant differences, eSigned SMART Docs and eSigned PDFs each have benefits useful to the lender. The choice is driven by each lenders’ individual needs, but it is also important to consider that the two types of eDocuments are not mutually exclusive. For example, a SMART Doc can include an embedded PDF file that has been electronically signed.

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Many advocates of the SMART Doc tout the format’s native Web structure and data integrity. The SMART Doc Version 1.02 format has also been implemented by most eClosing technology providers. Most importantly, it is the only electronic note format currently accepted by Fannie Mae.

SMART Docs are data-driven and system agnostic. They do not require proprietary software to implement, and the format can automatically extract loan data. SMART Docs also provide an extra level of data security with an Audit Trail feature that can track every change made to the document and provides a secure record of all signatures, deliveries and modifications.

The challenge to SMART Doc eNotes has often been around implementation. Lenders and financial organizations trying to consolidate technology formats for electronic documents across all departments have also struggled since few industries outside mortgage lending use XML for binding legal documents. The required XHTML View (for SMART Doc Category 1 eNotes) can also create inconsistent displays on different Web browsers, and print rendering can be inconsistent. This is a headache for consumers who want a simple process to view, print and sign documents.

eSigned PDF documents, which have been in use longer than SMART Docs, are the most widely used format by mortgage lenders and other financial services, even though most investors still do not accept them. These documents are also legally binding (remember, the legal foundations of ESIGN and UETA are technology-neutral), and eSigned PDF files are accepted by many industries outside of mortgage lending. PDF documents are arguably easier to implement and present a consistent display across all Web applications. In addition, all eSign providers can electronically sign PDFs. PDF documents are also easy for the borrower, since free PDF reader software is readily available for home computers, allowing borrowers to easily receive, view, save and print the documents for their own records. However, it is more difficult to embed data into PDF Documents in a standardized format, something that SMART Docs were designed for from the start.

Is There a Third Party?

While the selection of SMART Doc or PDF sounds like an all-or-nothing decision, there have been recent changes to the proposed formats that incorporate the best of both formats. The MISMO SMART Doc V3 protocol (an inherent part of the MISMO Version 3.x Reference Model XML specifications) includes both the native XML Data section and a View section that can contain any file format, including PDF, images, Microsoft Word and others. This closes the gap between the formats by providing a consistent, standardized structure for all loan documents – disclosures, closing and title – with XML data along with an easy-to-use PDF view for consumers.

Fannie Mae and Freddie Mac are also looking hard at ways to facilitate broader eMortgage adoption, per their FHFA Scorecard mandate, and moving to SMART Doc V3 with PDF View is one consideration. In addition, the MERS® eRegistry allows for registration of PDF or SMART Doc V3 eNotes through the Data Point registration method, eliminating one of the biggest obstacles to embracing one format over another. These considerations are being vetted within the MISMO eMortgage Workgroup, which will meet in person in Crystal City, Virginia during the week of September 12 – see www.mismo.org to register and join us there.

While neither PDF nor SMART Doc 1.02 answer the industry’s need for a universal intelligent electronic document format, SMART Doc V3 with a PDF View provides a universal View format coupled with intelligent, standardized XML data. Widespread adoption could be spurred on by broad investor acceptance, which could be led by GSE acceptance and an associated timeline for required delivery.

Today’s top document vendors can already dynamically generate multiple output formats. Adding the SMART Doc V3 to their systems would be relatively easy, and would provide lenders nationwide with the data security, technology and usability needed to propel electronic loan documents into the mainstream.

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