CoreLogic: Foreclosures Fall A Lot

Data from CoreLogic shows the foreclosure inventory declined by 25.2 percent and completed foreclosures declined by 20.1 percent compared with August 2014. The number of foreclosures nationwide decreased year over year from 46,000 in August 2014 to 36,000 in August 2015, representing a decrease of 68.9 percent from the peak of 117,357 completed foreclosures in September 2010.

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Completed foreclosures reflect the total number of homes lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 5.9 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been nearly 8 million homes lost to foreclosure.

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As of August 2015, the national foreclosure inventory included approximately 470,000, or 1.2 percent, of all homes with a mortgage compared with 629,000 homes, or 1.6 percent, in August 2014.

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CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO) declined by 20.7 percent from August 2014 to August 2015 with 1.3 million mortgages, or 3.5 percent, in this category. This is the lowest serious delinquency rate since January 2008. The foreclosure rate (defined as the share of all loans in the foreclosure process) was at 1.2 percent as of August 2015, which is back to January 2008 levels.

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“Mortgage performance continues to improve, however there is a dichotomy between the performance of recently originated loans and legacy loans. Newly delinquent loans are at the lowest rates during the last two decades. That reflects the tight underwriting and improved economy during the last few years,” said Frank Nothaft, chief economist for CoreLogic. “However, the foreclosure pipeline of legacy loans remains elevated. Over the last 12 months, there have been 500,000 completed foreclosures, more than double the number during normal periods.”

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“In August, the housing market experienced solid and steady increases in sales, prices and performance and our preview data indicates those trends will continue in September,” said Anand Nallathambi, president and CEO of CoreLogic. “Longer term, the recent increase in household formations and rapidly improving labor market for millennials will provide a demographic tailwind to the housing market and keep demand firm.”

Can We Talk?

Most people recognize “Can we talk?” as a catchphrase used by the late Joan Rivers. But it should be a phrase that lenders are asking of their business partners and borrowers. Many of the regulations and pilot programs introduced recently will fundamentally change the way that lenders will interact with them both.

Let’s start with the consumer. The Consumer Financial Protection Bureau (CFPB) is responsible to make sure the American consumer gets all of the information they need to make an informed financial decision when it comes to mortgages, credit cards or other types of consumer financing. To ensure borrowers are kept informed throughout the lending process, lenders are being asked to provide consumers with information and documentation from the point of sale through servicing the loan. Consumers must receive copies of their initial disclosures, appraisals, closing disclosures and documents, privacy notices and many others. The result is that consumers are becoming involved in the mortgage process as never before.

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To facilitate this new level of interaction with borrowers, many lenders are turning their static websites into interactive communication portals. Instead of just presenting information to a consumer or asking them to fill in a form or application, lenders are creating a two way dialogue with their customers. They are implementing tools such as: live chat where a consumer can electronically chat directly with a loan officer or help desk; secure messaging for communicating sensitive non-public personal information; document exchange where consumers can go to not only electronically view their documents, but also send documents back to the lender if necessary; and finally electronic signatures where borrowers can electronically sign and return documents with the click of a mouse or the tap of a screen. With today’s on the go consumer, these features need to be available not only from a consumers computer, but from their smartphones and tablets as well.

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But it’s not only borrowers that lenders need to step up their communications with. Business partners such as closing agents, attorneys and title companies are going to need additional attention as well. Starting in August of this year, the current Truth in Lending disclosure document and HUD-1 Settlement Statement will be combined into a single document known as the Closing Disclosure. Currently, in many cases the HUD-1 statement is not produced by the lender but rather by the closing attorney and is delivered to the borrower at the closing table. But since the HUD-1 is now included in the final Closing Disclosure, and the final Closing Disclosure is required to be provided to the consumer at least three business days prior to the closing, a new level of collaboration between lender and closing agents will be needed. By implementing a communication portal with secure messaging and document exchange, it will be much easier for a lender to streamline this collaborative process.

So the next time you deal with a consumer or business partner, maybe the first words out of your mouth should be “can we talk?”

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Don’t Lose Sight Of The Human Touch

The last couple of decades have completely transformed the way consumers and mortgage servicers interact. New and augmented self-service technologies have delivered higher and higher levels of efficiencies in borrower interaction. Increasingly tech savvy borrowers have come to expect a broad range of technology options for accessing account information and communicating with their servicers. It’s been a great thing for borrowers and servicers alike.

Most borrowers now take advantage of more than one self-service channel in the course of their relationship with their mortgage company. Perhaps it’s a quick look at the principal balance on the web tonight, followed by a one-time draft payment using Interactive Voice Response (IVR) next week, or double-checking on a web app to make sure a payment posted. The use of various self-service channels depends upon the borrower’s preference, what tools they have available at any given time (cell phone, PC, etc.), and the nature of the inquiry.

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The mix of self-service options….web, IVR, mobile apps…is the proverbial win-win. So long as the applications are well-designed, consumers enjoy the convenience, and servicers can now process inquiries for a fraction of the cost of a call handled by a representative.

The Downside of Self-Service Technologies

In our rush to embrace these new and improved self-service technologies, the hazard is forgetting the critical importance of the human element. While borrowers will frequently be happy to grab information on the run from the web or IVR, some questions actually do require a conversation with a representative. Consumers want the assurance that a representative is available if needed, no matter what channel they’re using. It’s an important reassurance…even if they don’t take advantage of it.

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We’ve got to strike a proper balance between facilitating self-service and maintaining easy access to contact center representatives. Through careful design and scripting, we should encourage borrowers to serve themselves using IVR, the web, and mobile apps, but we’ve also got to ensure it is easy for them to raise the white flag and seek human help if needed.

Opting for an Agent via IVR

One of the greatest complaints among consumers is that IVR menus are poorly worded and make it difficult to access an agent. As servicers strive to improve customer satisfaction, it’s more critical than ever to build IVR menus that make it easy for callers to navigate to the information or service they need. However, it’s equally important to offer an option to speak to a “live” representative.

It may seem counterintuitive, but making it easy to press “0” for a representative at any menu won’t discourage self-service. If it is easy to authenticate and if IVR menus are well-written, borrowers will typically self-serve because it is faster. But if the borrower really needs to speak to someone, you do yourself no favors by hiding the option to get to an agent. It’s important to ensure that each major menu offers the caller a consistent option to press “0” for a representative.

Contact Options on the Web

The web channel is no different. Borrowers accessing account information on the web often don’t find all the answers to their questions. Once again, they’re going to desire a quick and easy way to connect with a representative.

The worst solution is to expect the borrower to find your 800 number on the web and call for help. That call will lead to your IVR system where the borrower will have to once again authenticate and then navigate through a menu to reach an agent.

Instead, consider augmenting your website with more direct contact options. For many consumers, the contact method of choice will be a web chat. Chat’s the perfect communication tool for a large segment of the population that has embraced texting and Instant Messaging (IM). It’s a natural extension of their day-to-day interactions, and they are comfortable using chat to quickly get their questions answered.

But not everyone is chat-oriented, and some questions are more readily addressed over the phone. For those web users, the better option is to build into your website an option to request a call from a representative. When the borrower fills out the form, an agent in your call center is notified immediately that this borrower has requested a call, and the call is placed to a phone number entered by the borrower. An immediate call back gets the borrower’s questions resolved quickly and underscores your commitment to customer service, and makes for a happier borrower.

Both borrowers and servicers benefit from the full range of self-service options, but the servicing business is still very much a people business, and the need to connect borrowers with call center representatives continues to be a critical factor in customer satisfaction.

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Industry Innovator Returns

I don’t usually write about individuals, but in this case I want to make an exception because I’ve always considered this individual to be a thought leader. LERETA has appointed current president, John Walsh, to the role of CEO. He assumed responsibilities earlier in September 2015 and succeeded Jim Thornton as he retires after 25 years with LERETA. Thornton is a minority shareholder of LERETA and will continue to serve as a member of the board.

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“LERETA is a rare company with a 29-year history of exemplary service to the mortgage lending and servicing industry,” Thornton said. “While the leadership of the company has changed a few times during the years, LERETA’s commitment to providing extraordinary service has not waivered. John and the current leaders at LERETA exemplify this commitment, and I am excited to assume my new role supporting this outstanding team. Being part of such a fine company, both in my past roles and in the future, is extremely rewarding.”

Walsh has more than 30 years of experience in the real estate industry, including six years as president of DataQuick, a nationwide provider of real estate property information and mortgage settlement services. Prior to DataQuick Walsh has served as CEO of three technology companies and as an executive at Weyerhauser Mortgage. He has an MBA from Harvard University and a B.S. in Economics from California Lutheran.

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“We have a great opportunity at LERETA,” Walsh said. “The lending industry clearly needs better alternatives for managing the complexities of tax service. LERETA is well positioned to be that alternative based on the innovation we bring to the market, our deep, bench strength of highly experienced tax professionals and our unique commitment to extraordinary service.”

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Going Beyond TRID Compliance

We talk a lot about TRID compliance, but there are a host of other things that lenders also have to comply with. For example, IndiSoft has teamed up with Chicago-based business consulting firm Navigant Consulting, Inc. to include Home Mortgage Disclosure Act (HMDA) reviews via its RxOffice Compliance module. These enhancements will provide visibility and simplicity to users striving to remain compliant with HMDA regulations.

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“The HMDA review will transform the way users manage their compliance issues,” said Beji Varghese, a managing director at the  valuation and financial risk management practice at Navigant. “The addition of the HMDA LAR module  will allow users  to quickly identify issues with their HMDA data and design solutions to remediate those identified issues.”

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In addition to supporting existing federal, state and investor regulations, Navigant and IndiSoft now offer technology  to rapidly verify compliance to HMDA standards. These features include:

  • HMDA Data Verification: Support of blind entry of data enables input of data without any influence of existing information and allows comparison of data with LAR data.
  • Ability to consume Loan Application Register (LAR) data file.Ability to upload LAR data files in Excel format from the application, allowing users to see the comparison of blind entry and LAR data in one click. This will enable a clear identification of mismatched data points.
  • Support for various key reports related to HMDA quality control.The platform now supplies three distinct SSRS reports with one–click export capabilities.  .

“Staying compliant has never been so simple with this innovative review process,” said Vinayak Kulkami of IndiSoft. “Our technology gives users the peace of mind they need to focus on day-to-day processes instead of whether they are compliant.”

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Why Do We Fear Consumers?

Recently Mortgage TrueView introduced a website for consumers that allows them to identify a listing of lenders in their area. No big deal you say. But it seems, at least according to lenders we have talked to, it is a very big deal. You see, this rating is based on the HMDA data. Lenders it appears, are very concerned that this data is biased against them and will give consumers and others focused on Fair Lending some yet to be determined means to point a finger at a lender for not being “Fair”. Yet how is publically available data that any consumer can see, a risk to a lender? In fact the data in the database actually identifies many smaller lenders whose ability to process and make a decision on loan applications are equal to or better than the larger lenders. This program is really a valuable marketing tool. Yet lenders seem to be afraid.

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At the recent Risk Management and Quality Assurance Conference there was a lot of talk about the new “Manufacturing Quality” requirements of the agencies. These entities were eager to announce how much better the loan quality is now and how pleased they, as investors & insurers, are with the product. However manufacturing quality concepts state that an effective business ensures that products and/or services provided by a business does in fact meet the expectations of all customers. When I asked what we have done to ensure that the product/services we provide meet the consumers expectations, all I got back was a blank stare. Others of course told me quite bluntly that quality is not a consumer issue and that their expectations are not important to us.

Apparently, as an industry, we see consumers as a necessary evil, one to be kept quiet and fed disclosures so that they cannot give feedback that we perceive as negative. In fact I have had attorneys tell me that they advise their lender clients to never tell the consumer anything.  Looking at the attitude presented in these comments, it would appear that this industry is afraid of consumers and as a result we give them only the necessary information that is required of us by the CFPB. And yet we wonder why the CFPB keeps adding more and more to our regulatory burden.

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I wonder what would happen if we turned this attitude around and made the consumer the focus of our attention. If fully explained, would consumers still be confused and nervous about the origination process? Would they be as likely to file a complaint if they knew exactly what the note and mortgage required of them? Would they be more likely to tell us if they run into financial difficulty and take advantage of the modifications and forbearance we have always offered? What if the CFPB had nothing to do about mortgages and focused instead on payday lenders or student loans? Take about regulatory relief!

Right now this idea is but a dream, a future that may never be. But what if?

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Richard Cordray And My Bichon Frise

I have a Bichon Frise named Joshua – he is a rescue dog that came into my life last year. He has plenty of things in his favor: he is very cute, incredibly photogenic, and a great chick magnet when I go walking in the park. But he has one thing that can be considered as a disadvantage: he doesn’t really listen when he gets a certain thought in his mind.

Joshua

For instance, Joshua has been told on more than one occasion that the laundry hamper is not a playground, but that doesn’t stop him from rolling in the dirty underwear and t-shirts. Nor is Joshua interested in being told that the toilet brush is not a chew toy. Indeed, on more than one occasion Joshua has been running through the house holding the toilet brush in his jaws as if he was cigar-chomping Groucho Marx romping about. And as for our warning about barking at the elderly man across the street, all I can say is that I am glad our senior neighbor either has an immense sense of humor or a poor sense of hearing – his mere presence in his front door gets Joshua growling and howling.

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I don’t know if Joshua has any canine relatives, but he has a two-legged brother running the Consumer Financial Protection Bureau (CFPB). And while Richard Cordray is nowhere near as cute as my Bichon Frise, he certainly shares Joshua’s stubborn habit of ignoring what is said to him.

Whether it comes to his refusal to admit the error of the CFPB’s so-called consumer complaint database – a digital mess that even the Federal Reserve’s Office of the Inspector General has criticized for numerous inaccuracies – or his failure to listen to the industry about putting a good-faith period into place following the implementation of the TRID changes or his fingers-in-the-ears/turning-of-his-back to documented problems on cost overruns surrounding the new CFPB headquarters and problems with discrimination in CFPB personnel procedures, Cordray is the rare Washington power figure that holds people in complete and utter contempt. He will not admit that his bureau is capable of making any error, nor will he concede that it is accountable to the American public.

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For example consider this exchange from a June 2014 Congressional hearing when Rep. Jeb Hensarling quizzed Cordray about the rising costs of the CFPB headquarters construction. “Let me just ask you about specific costs, they come from public documents that have been filed, and with taxpayer money—you do agree it’s taxpayer money that you are spending?” Hensarling said.

“I would say that I have children, too, and I care about the debt as you do, for the same reasons,”

Cordray said – a response to an earlier and unrelated remark made by Hensarling on how his

“I just asked, do you agree it’s taxpayer money?” Hensarling said.

“It is federal government money that comes from the Federal Reserve,” Cordray responded.

“Okay, so it’s difficult for you to say it’s taxpayer money?” Hensarling asked.

“I don’t know whether taxpayer is the right term or not,” Cordray replied. “It’s the money of Americans.”

Uh huh. Well, I can say that my stubborn little Bichon Frise has one trait that Cordray lacks, and that is humility. Consider the self-congratulatory tone that Cordray during a recent speech before the National Association of Realtors, when he claimed that the CFPB’s rules to “encourage common-sense, consumer-friendly business practices” were key to the current level of positive housing market achievements.

“In 2014, the first year of our new rules, mortgage originations for owner-occupied home purchases increased between four and five percent,” Cordray said. “The upward trend appears to have accelerated over the first half of this year. And while we saw minor consolidation in some parts of the mortgage market, there is no evidence of any mass exodus, as the doomsayers predicted. In fact, after adjusting for merger activity, the number of lenders that reported having originated mortgages showed an increase in 2014. And in particular, the number of community banks and credit unions that originated home-purchase mortgages last year was higher than the year before.”

Oh, we have a healthy and happy housing market thanks solely to the CFPB, right? Well, maybe there is one more bit of overlap my Bichon Frise and Cordray: my dog leaves his waste in the park and Cordray leaves them in his speeches.

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How To Succeed At Your Next Trade Show

When you’re at a business training or networking event, you’re probably there for two reasons:

  1. To learn how to grow your business; and
  2. To connect with potential clients, referral partners and teammates.

In the article “3 Simple Shifts That Will Make You the Star At The Next Event” by Stephanie O’Brien, she details three ways you can stand out and shine, be the star of the event room, and attract great people to your business, which include:

#1: Don’t wait for permission to be yourself

How many times have you been at an event where someone asks for a volunteer and nobody steps up? For example, I was on a ziplining tour, and I was the fastest and most energetic person there. Even though I was tempted to sprint to the front of the group on the path from each zipline to the next, I self-consciously held myself back.

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Nobody else seemed particularly eager to get to the front of the line, to go first, or even to sprint for the sake of sprinting. And yet, I hesitated, afraid to look selfish or like an attention-seeker, or even to stand out. Then it suddenly occurred to me to ask myself: “Why am I worrying about this?

“Why am I holding back from doing what I want, when nobody’s given any indication that doing it would bother them?”

There and then, I made a decision: I was going to do what made me happy, and if somebody else didn’t like it, it was their responsibility to tell me, and my responsibility to decide what to do about it.

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As a result, when I went to the training event, I was able to show up as my full, vibrant self, not as a safe, toned-down mask. And I was surprised by how much people responded to that. They were drawn to me, impressed by the fearless and outgoing personality I displayed when I wasn’t trying to be perfectly un-offensive.

That’s how powerful it is to show up as your full, authentic self. So put away the polished mask, do and be who and what you want, and don’t assume that it’s bothering anyone unless they explicitly say so.

#2: Use 5 key ingredients to good networking conversations

Remember, you aren’t there to sell. You’re there to learn, and to form relationships. So instead of focusing on getting the sale, and measuring your success by how many new clients you get, go to the event with the intention of learning about people and making connections with them.

Here are five things you should do in every conversation:

  1. Connect with the other person. Find some common ground, whether it’s a shared interest, a common goal, or a challenge you both face. Also mirror their body language, because this subconsciously helps them to trust you.
  2. Ask questions. People love to talk about themselves, and the more you give them an opportunity to do that, the more they’ll enjoy your company. Focusing on asking about them, instead of telling them about yourself and your product, also gives you an opportunity to learn what they need and why they want it, so you know how to make your offer when the time comes.
  3. Acknowledge them. If you genuinely like, admire or appreciate something about them, let them know.
  4. Serve them. If they’re struggling in an area with which you can help them, give them a bit of advice. Not enough to make it so that they don’t need to enroll with you, but enough to help with their immediate problem.
  5. Give them a choice. If you feel that the two of you have a good connection, and it seems like they need your product, ask them to take the next step, whether it’s exchanging contact information, or setting an appointment to connect after the event.

#3: Be clear on what you offer and to whom

When you describe the demographic you help and how you help them, your explanation should be clear and specific enough that if the listener knows a person who fits that description, that person’s face instantly appears in their minds.

This is called the “face test”. If your niche is so broad that your description of it doesn’t call a face to anybody’s mind, it’s too vague, and it won’t bring you many clients or referrals.

When you’re clear on your niche and your description of your service, you’re showing up as your full authentic self, and you know the 5 ingredients to good conversations, you can approach people with more confidence, attract more clients, and get more referral partners from each event.

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