A New Approach To Mortgage Lending


With key management based in New York City, Genpact helps clients become more competitive by making their enterprises more intelligent. With 64,000 employees in 24 countries and hundreds of clients, including more than 125 of the Fortune Global 500, Genpact started as a division of General Electric that served GE businesses for over 15 years. Today, Genpact is transforming business services with technology, facilities on six continents, and BPaaS (Business Process as a Service), bringing efficiencies to mortgage lenders never before available. What exactly is BPaaS? And how will the company reshape lending in the future? Genpact’s VP, Head of Mortgage Technology, Roger Hull shared his ideas on these subjects and others right here:

Q: Let’s start off by discussing the evolution of business process outsourcing. How has that changed over the years in your opinion?

ROGER HULL: That’s a great question. I think there largely have been two categories of BPO. One would be full private label services, outsourcing, just like what PHH has done, and then really what I will call more component-based outsourcing, where it’s essentially bodies working on the client technology, providing essentially overflow capacity. I think the shift that has started to occur today is a move toward a little bit of a hybrid of both approaches, which we think is a new model for success and we really think it’s actually a brand new model called Business Processes as a Service or BPaaS.

BPaaS is all about deploying a combination of our technology, sometimes integrated with client technology, or all our technology all together. We’ve got a current client in the middle of deploying, that’s using our platform end-to-end, but certain roles will be employees of the client, the lender, and then certain roles are outsourced to Genpact. I think that’s really the new emerging model, where you are all on one common technology platform, which creates total transparency along the transaction, but the roles can be staffed either by the lender or by Genpact. We’re getting a tremendous amount of traction in that space.

The old private label model really dictated that you use the provider’s platform and all of the provider’s people, and it left a lot of holes. If I’m the lender and I’m on the outside of my own process looking in, given today’s regulatory environment, that’s an unattainable position for the lender.

The new regulation that we’ve seen combined with what’s coming in August has really caused lenders to look at BPaaS as the best alternative vs. total traditional BPO. A lot of prospects are looking at full consumption of an end-to-end technology as well as a component outsourcing strategy for things like processing, underwriting, closing, funding, delivery. Lenders want to retain more of the client-based roles, like the loan officer and even create super hybrid processor roles within their organizations.

So, we’re seeing a big change in mortgage lending today. And we at Genpact like the change, because we’re well equipped for it.

Q: You talked a little bit about the regulatory changes scheduled for August. What’s your opinion of those changes? And from a competitive standpoint, how does Genpact differentiate itself in terms of how you will deal with those regulatory changes and future regulation, as well?

ROGER HULL: It’s a great question. First, I think we’re well ahead of the curve in making the changes from a technology perspective. And then also working with our doc providers because we use different outsourced document preparation providers to get our changes made well in advance of that deadline.

But, as you know, it’s not all about just the documents and the technology. There are also compliance process procedures that need to go with it. I think the natural advantage we have is having all of those in one shop, which allows us to package a fully ready set of compliance changes well in advance of the deadline to ensure that our clients can properly vet it, get comfortable with it, well before we roll it out.

When you execute the change piece by piece with multiple vendors, that can be messy. Also, in this scenario the burden of orchestrating that change and testing that change all falls on the lender. In the end, that becomes a much more complicated task.

Q: Genpact offers its services much like mobile apps in that you can go to one store and pick all the apps or just the apps you want to use at that time. How has that approach evolved and where do you see that going as it pertains to your overall product and services mix in 2015?

ROGER HULL: That’s a great question. Right now we’ve had a lot of demand for the full end-to-end offering. However, we do have prospects that are looking at that type of full-sale change coming in 2015 and are looking at how we can buttress a lot of the deficiencies in their existing platform. Certainly all lenders want compliance, but they also want efficiency gains, as well.

Q: What do you think lenders really want when it comes to technology? Also, what do they want when it comes to just outsourcing processes and operations?

ROGER HULL: They are obviously looking for, first and foremost, a platform that can be one platform vs. multiple platforms that can support the cradle to grave mortgage origination experience in a way that obviously makes them compliant—that’s probably first and foremost, but following closely behind, lenders want a system that will give them both the competitive difference from a customer experience standpoint and then just as well, one that will give them a significant lift over the cost profile, because as you know, a lot of the regulatory actions have led to more process steps, and more effort in the overall origination process.

And then when you put that in light of a market that, from a volume perspective, doesn’t look extremely attractive, you get really, really squeezed margins for a lot of lenders. They are looking for really, all three of those elements in a solution. In summary, they want something that can ensure that they are compliant; something that can differentiate them from their competitors so that they have the potential to have a larger bite of the smaller origination pie; and they want a system that can increase their profit margins per loan by giving them a competitive advantage relative to operating efficiency.

it’s really a three-legged stool. Compliance, something that can help them attract more business in a declining market and then getting better margins per loan. Anything that can offer that kind of triple threat value proposition is going to be a winning combination in this market, in my opinion.

Q: Looking ahead, where do you see the market as a whole going in 2015 both when it comes to lending and technology?

ROGER HULL: It’s obviously going to be a tough market. I know you’ve seen all the prognostications of what the volume is going to look like, which looks like a very, very tough market. We are talking to lenders that have compliance issues, as well. With the new rules a lot of lenders have added manual processes that are costing them profits. That’s a big concern that will drive automation in 2015.

Q: In terms of pure ROI, how is Genpact best prepared to help lenders over come these challenges in 2015 and beyond?

ROGER HULL: We’ll check that first box of being a fully compliant system. Second thing is we bring a tremendous amount of operating efficiency with the automation that we have. Third, you have the BPO component and our ability to, if you will, bifurcate certain jobs and remotely perform.

And that doesn’t necessarily mean off-shore. A lot of people think that outsourcing means off-shore. We have delivery centers in four different locations in the U.S. as well as near-shore in South America, and certainly offshore, as well. Our system gives you the ability to take tasks or roles like a processor role, and decouple some of those things that are lower-end functions that don’t require the same depth as say senior processor, and have them performed remotely at lower-cost locations and the lender actually gets a pick-up in quality.

Q: Some people have said that you can still innovate despite the new compliance issues. Other people have said that these compliance issues have caused both lenders and technology vendors alike to stall their innovations. What do you think about industry innovation?

ROGER HULL: There’s great opportunity for industry innovation. I’m pretty excited about some of the innovation we’re bringing forward. Certainly compliance has created a complication, but I don’t know that it doesn’t actually allow us to separate those who can do it well from those who really struggle with it.

We did some very interesting things in the area of conditions management to essentially treat compliance as conditions much like you would eligibility or underwriting. What I mean by that is we’ve leveraged a number of industry-endorsed external compliance engines to make a call from our system, perform a dynamic compliance test, and then bring the results back and have it quickly effect something in the workflow.

If the severity of the return is such that it should create a stop in the workflow, we’ve treated that as an outstanding condition that has to either be cleared or waived before the loan can proceed. What that does is it makes sure that the compliance issue doesn’t slip by and doesn’t get to a point in the organization’s process where it becomes very, very difficult to remediate.

We think that’s extremely progressive. And by the way, it doesn’t take human identification. We think some of the compliance changes actually create opportunity for innovation as opposed to constrain innovation.


Roger Hull is VP, Head of Mortgage Technology at Genpact Mortgage Services. He leads the technology side of Genpact and has 30 years of experience in all areas of real estate finance technology. He works directly with clients and prospects to create efficiently implemented Genpact solutions. Prior to joining Genpact in 2011, he was CEO of technology firm High Performance Partners, LLC; CIO of First American Corporation; CIO of First American Title and Vice President of Technology for Coldwell Banker Relocation Services.


Roger Hull thinks:

1. You’re going to see an accelerated pace of technology replacement.

2. You’re going to see a much more significant move to private-label origination in some of the smaller and midtier lenders.

3. Among the upper tier, you’re going to see adoption of increasing amounts of technology, and probably some level of component outsourcing.

Six Things You Need To Know About Today’s Risk Management


Chris-AppieThe 2014 midterm elections are now behind us, and the predicted shift in the Senate’s majority party has given Republicans control of both houses of Congress. While some of its legislative priorities have been signaled in advance, it is not clear how—or if—the Republican leadership may choose to revisit the Dodd-Frank Act.

Now in its fourth year, that Act remains a lightening rod that attracts criticism for its effects on the economy, regulatory burdens, and confusion regarding rules that have yet to be finalized. House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC) released a committee staff report in July that made plain the majority’s perspective. Its title, Failing to End Too Big to Fail: An Assessment of the Dodd-Frank Act Four Years Later did not leave much to the imagination. Ironically, among its findings was the observation that: “The Financial Stability Oversight Council (FSOC) is an unwieldy conglomeration of regulatory officials charged with identifying risks and taking steps to mitigate them.” This comes in the same quarter that the Office of the Comptroller of the Currency (OCC) published final guidelines for strengthening governance and risk management practices for larger financial institutions. The “unwieldy conglomeration…charged with identifying risks and taking steps to mitigate them” statement can as easily be applied to inefficient risk management practices as it can to Dodd-Frank itself, and regardless of possible revisions that may be in the Act’s future, it’s safe to say that the collective mandates from the OCC, the CFPB, and the Federal Reserve promoting enterprise risk management (ERM) are here to stay. While there are many components of ERM, transaction risk management (TRM) is one of the most easily addressed, yet often overlooked areas where a financial institution can improve its overall ERM practices.

As the regulatory conditions on the ground continue to evolve, financial institutions have reached out with risk management concerns that have taken on a common pattern, with six questions raised more frequently than others.

Risk management is not new. Why are we talking about managing transaction risk now?

Risk management is as old as risk, and managing the risks surrounding transactions is something that every financial institution has done in some form or another from the first day they opened their doors for business. So why are we talking about it today like it’s something new? The financial crisis of 2008 has intensified national focus on this perennial subject on all levels, starting with the Congress, the federal regulating agencies, and on down to the community bank on our street corner. Our current regulatory environment is one that demands rigorous operational methodologies and careful analysis of data to manage those risks specifically related to the transaction. And when Fannie Mae and Freddie Mac begin requiring the Uniform Closing Data set to accompany portfolios they are purchasing, the importance of the underlying data and its validation will drastically increase.

My institution already has an ERM program—why do we need to a special program to manage transaction risk?

Transaction risk management is a necessary component of enterprise risk management and may be thought of as the data collection and analysis systems of enterprise risk management. Much in the same way a financial institution is responsible for managing its data, the Office of Financial Research (OFR) is responsible for the collection and analysis of the data that assesses the health of our financial system. In both cases, the success of data analytics starts with the data itself. It is interesting to note that the “Failing to End Too Big to Fail” report rates the OFR’s progress as “unsatisfactory” and that its “data collection efforts risk imposing substantial costs.” The OFR’s work is intended to support the Financial Stability Oversight Council (FSOC), but here again the inherent challenges of an “unwieldy conglomeration” must be overcome at both the regulatory level and the financial institution level. Data collection and analysis must be an integrated component of transaction risk management, rather than a separate, disconnected process that gets tacked on somewhere during the processing of loans. The only sustainable data analytics solution is one of automation, and one that is part and parcel of the larger TRM program.

How is transaction risk management different than compliance?

Compliance is not a new concern in the financial industry. Most financial institutions are able to stay in compliance by hiring more staff and leveraging document libraries that are intended to warrant compliance. Although compliance (or lack thereof) is top of mind for institutions today, it is only one of many inherent risks of each transaction. If nothing else, the 2008 financial crisis, the subsequent formation of the CFPB, and the increased focus on financial institutions’ policies and processes have made it clear that profitability requires more than creating additional checklists to achieve a compliant outcome. Instead, there is an increased focus on a solution that encompasses more than just compliance risk mitigation: a solution that addresses operational risk, reputation risk, liquidity risk, and other risk types. Not only will a transaction risk management solution manage compliance risk, but it also leverages technology to flush out errors and inconsistencies that may be present in transaction content. The ability to address these types of issues is critical to minimizing the operational and reputation risk to which a financial institution is exposed. The CFPB has provided a convenient method for consumers to share complaints related to their experiences with institutions. Currently, consumers have the option of posting small synopses of their complaints on the CFPB website, but the Bureau has proposed an expansion of the rule that would allow consumers to publish full narratives of complaints. This trend toward full transparency as it relates to consumer complaints (complaints that, many times, cannot be properly defended based on the institution’s obligation to protect consumer information) makes it essential for institutions to pursue a TRM solution that allows them to transact business in way that diminishes the likelihood that a consumer would find cause for complaint. Although compliance is, and will continue to be, a major component of any TRM solution, there are many other risk factors that institutions need to consider when doing business.

Risk management doesn’t make my institution more competitive…or does it?

Addressing transaction risk not only makes institutions more competitive, it also can make them more profitable. A common reaction to new regulations is for institutions to hire more employees. More hiring equates to more training and more personnel costs. If those investments are instead allocated to a transaction risk management solution, personnel can spend less time checking for errors, researching which documents are required for which transaction, and making sure no required data is missing. This allows more time to be spent building, maintaining, and enriching borrower relationships. A focus on the borrower rather than the document supports a reputation of excellence in customer service.

At what point in the transaction process does TRM start?

At its core, a TRM solution is driven by data: both the data that is specific to a given transaction and data that is more universally applicable to a financial institution’s operational processes. The TRM process starts long before any data is collected. Setting up and configuring a risk management solution helps assure institutions that policy decisions and product definitions are configured correctly within the system before a borrower walks through the door. Once this data is configured and vetted by the proper personnel, loan officers can focus on collecting only the required customer data at transaction time. These processes help ensure that each transaction, regardless of who at the institution performs it, is completed with a high level of accuracy.

Is transaction risk management a bridge too far?

A dedicated effort to manage transaction risk can sound like a target too ambitious to actually reach, and the truth is that today’s business targets may be unrealistic if you approach them with yesterday’s business systems. It’s easier for business operations to update technology processes with technology than it is to update human processes with technology. No one is designing their online banking program for dial-up or backing up their data center with floppy disks, but it’s common to hear about manual processes and laminated checklists used to manage compliance-crucial data validations. The technology is out there now to help you institute a transaction risk management program that automates and safeguards critical data analysis.

Business Change: More the Same Than Ever

It seems unlikely that the recent election will drastically change the regulatory environment created by the Dodd-Frank Act in 2010, but based on the Republican leadership’s position that the law missed the mark, we may see tinkering around its edges. Markets crave certainty even if the players do not particularly like the rules that regulate them. It is better to know how to follow an unwanted rule than not knowing what do to at all, and it may be that fear of such uncertainty becomes the force that stalls significant modifications to the Act. This congressional hesitancy, along with proposals to eliminate the Fannie Mae and Freddie Mac conservatorships, new guidelines from the OCC for risk management practices, and ongoing CFPB rule proposals that can touch every aspect of your business. Today’s mortgage industry landscape requires constant improvements in technology to ensure profitability for lenders, safeguard compliance, and open up home ownership to a new generation of Americans stung by the market collapse and toughening underwriting standards.

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What Los Need To Know


Stanton_ShaneHistorically, mortgage production slows at the end of the year. It’s also a time when many loan officers begin to explore the possibility of switching companies to find a better career situation. But rather than rushing into a decision, smart loan officers need to conduct a careful self-analysis and thoroughly research potential lender partners.

As they move through the process of making a potential change, loan officers need to consider several factors to help them find the right model-match to build a better business. In far too many instances, loan officers focus on a single, or current, pain-point that is impacting their business. For example, if their current company does not have a strong marketing support capability, then marketing becomes the issue they try to address. In many cases, this singular focus can lead loan officers into making a rash decision.

As a first step, a loan officer must decide what their individual business vision is for the future. This could include origination sources, production potential, product needs, company values, marketing strategy, and other factors. At our company we call this part of the process “business mapping.”

Business mapping provides a loan officer with a full 360-degree view of their business. It provides the loan officer an opportunity to systematically evaluate and decide which company is best suited to partner with to build a stronger business over the long-term. Clearly defining both a unique business vision and a plan to achieve success is critical.

Below are eight core areas loan officers should always include in their business mapping process. A monthly or quarterly examination of their business map will assure they remain on track.

Compensation: What is more important to you, making as much money as possible on every single transaction, or creating a business built on repeat business and referrals? Creating satisfied customers by always providing the best pricing and service possible ultimately generates more volume and in the end more income.

Volume: Do you want to self-generate 100% of your business or do you want company-supplied sources of business? If your goal is to increase volume growth through your own sources, you need to find a company that has the same focus. This will narrow your company choices to search and then allows you to verify if the lender has a high number of top-ranked producers and ask: How do you support those top producers to be successful?

Products and Price: Do you want a business predicated on having a full breadth of products, including unique niche products? Does having the best rates matter to your business? If your business is built on a single niche product, diversity and price typically won’t matter to you.

Marketing:   Do you want to maximize social media? Is client retention marketing important to you? Do you want to utilize co-branded marketing? Marketing is a key engine to volume delivery and growth. Loan officers need to fully understand what marketing support and tools a company provides to help increase business and enhance their own personal brand.

Culture: Do you want an open culture from top to bottom? Do you need to be held accountable by your manager to perform weekly business development tasks, or do you perform better with limited supervision? As an example, many of our loan officers are high-volume producers that would be held back by the micromanager. But many new originators we have hired do benefit from experienced oversight and direction.

Operational Support: Do you prefer to simply take the application and move onto the next deal, or do you feel being involved in the entire loan process is vital to best-in-class service? Do you believe in a partnership with your operations team, or do you not care who works your files? This is a big topic to consider, as many companies have their own vision of operational support.

Transitioning: What are your transition goals? Defining this enables you to ask some very important questions. Will your new lending partner help you to transition, even before you come on board? For example, if you are coming to a mortgage bank from a large commercial bank, will the new company help you get the proper licensing? Does the new company have a “concierge” team to help you adjust, or are you more or less on your own? One rule of thumb: If it takes you more than 10 minutes to do anything, and the company isn’t able to offer you some kind of help, perhaps you need to find a lender who will.

Chemistry: How important is it for you to have the right chemistry with your co-workers? The mortgage industry is a people business. You cannot underestimate how important having the right chemistry is with all the people you will be partnering with to succeed. Take the time to get to know your potential employers / partners.  Visit the potential branch office you will be working in, and if possible, the company’s national headquarters. Meet the team, ask questions and get a better understanding of the culture first-hand.

Once this process is accomplished, the loan officer will fully understand all that is important to their business. As a next step the producer needs to evaluate their current company’s business map against their own. If they aren’t lined up, it’s time to look elsewhere.

To find the right match, the loan officer might create a “decision matrix” leveraging what they discovered in their business map.

In the first column, include all the key factors, and rank them in order of importance. In subsequent columns, rate each company, including your current employer, and how they rank in each category. Once each company is evaluated, it should begin to become clear which firm represents your best model-match.

Making a switch to a new lender is a big decision and takes a lot of introspection and research. Success happens when loan officer priorities and lender priorities are in synch, rather than in opposition, to each other.  Strategically working through this process is beneficial to both the loan officer’s bottom line as well as the lender partner’s long-term success.

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Managing Third Party Relationships Right


Greg Schroeder croppedSuppose you were the owner of a restaurant, and a number of patrons sued you because they got food poisoning. It turns out that a food supplier whom you trust and regularly monitor is the source of the tainted food. Yet you are deemed to be the party held accountable and must pay millions of dollars in damages. Who should be responsible in this instance? The restaurant or the supplier?

There are many cases in the courts today involving lawsuits against both restaurants and suppliers, and decisions have come down on both sides. A restaurant may be held liable if it’s proven it did not maintain safe conditions for storing or cooking food, or a supplier can be held liable if it’s proven that the supplier was the source of the tainted food.

It’s much more clear-cut in the mortgage industry: without question, lenders are held responsible for the actions of their third party vendors.

Confronted with an ever-changing array of regulatory and compliance challenges driven by the Dodd–Frank Wall Street Reform and Consumer Protection Act now being enforced by regulatory agencies, including the Consumer Financial Protection Board (CFPB), lenders have to maintain tight ships with their vendor relationships. Keeping up with the changing landscape is difficult and the penalties are steep. The Dodd-Frank Act authorizes the CFPB to increase its assessment of civil monetary penalties from up to $5,000 per violation per day to up to $25,000 per violation per day if violations are reckless, and up to $1 million per violation per day if violations are knowingly occurring.

Lenders aren’t just being held accountable for their own actions, but for the actions of all the third parties with whom they do business as well, as stipulated by the CFPB, the OCC and other regulatory agencies. In other words, lenders cannot hide behind a cloak of ignorance or point fingers elsewhere when it comes to how someone they work with conducts their business, specifically third party originators (TPOs) and appraisers. And it’s not just the CFPB that is focusing on third-party responsibility, but the Federal Reserve System, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and other entities as well.

Regulators are already stepping up their enforcement in this area. In fact, they have already uncovered cases in which lenders have failed to properly assess third parties for risk and failed to monitor their activities. This poses a difficult question for mortgage companies: How do they keep track of what their third-party vendors are doing without breaking the bank or losing focus on their primary mission, which is selling and servicing loans?

The following list offers five practical points of advice for effectively managing and overseeing third parties.

>> Know who you’re doing business with. That means more than simply having a name, address and phone number in a spreadsheet. Lenders must confirm that TPOs, appraisers and other third party vendors are registered and have the proper certifications and licenses, policies and procedures, financials, etc. and that these materials are up to date. To be extra thorough about it, it’s a good idea to look into a third party’s character and past compliance performance, as both can be indicative of future problems. A comprehensive background check is recommended, as it will assure regulators that you’re on top of your third party vendors.

>> Have a plan. Lenders need to document their strategy for monitoring third party vendors, then test it and put it into use. It’s no longer enough to simply “check the box” or state that your third parties are in compliance–you must have a clear action plan and be able to prove that you are indeed following it. If you’re just giving lip service to monitoring third party vendors, auditors won’t take your word for it. They are looking for documented strategies and procedures, and proof that a program to monitor third parties has been put into action. The CFPB and other regulators are also looking for lenders to test their programs to make sure they are working.

>> Monitor third party vendors on an ongoing basis. Once is no longer enough. This is very critical as many companies don’t realize that a “point in time” check of a third party vendor won’t matter to auditors if a problem pops up six months later, or even before a loan is closed. In fact, the regulations state that third parties must be monitored on an ongoing basis. The trouble is most lenders don’t have the time or resources to perform regular checks and are turning to an outside vendor to manage that function—which can also spell trouble if such a vendor is not chosen carefully.

>> Be prepared for audits. Lenders and servicers must assume that someone—a regulator, agency or outside auditor—will eventually take a closer look at their operations. It’s better to be safe than sorry, and more and more, lenders are being audited to verify they are doing a good job of monitoring third party vendors, and are doing so on a regular basis. If you’ve followed the steps above and planned for this scenario, you shouldn’t have much to worry about.

>> Keep thorough records and be ready to access them quickly. Being prepared for an audit means you’ve kept complete records of the surveillance work you’ve done, and are able to readily access it to show to auditors. The fact that you have a good plan for monitoring third party vendors and have put it into action won’t mean much if you’re not able to show the proof to regulators.

Third party vendors encompass more than just originators. According to the regulatory agencies and the government-sponsored enterprises (GSEs), appraisers too are considered a third party vendor and the due diligence and oversight of appraisers falls squarely on the shoulders of the lender. While you may use a reputable appraisal management company (AMC) to manage the appraisals on mortgage loans, ultimately it’s you as the lender who is held responsible if there is a problem with an appraiser.

According to the OCC, lenders need to adopt risk management processes that are “commensurate with the level of risk and complexity of its third-party relationships,” and that runs through the entire life cycle of these relationships. Such processes need to include plans that identify the risks of the third-party activities, how the vendor was selected, written agreements or contracts that cover the responsibilities of the third party as well as contingency plans for ending the relationship. In fact, a proper contract with a third-party provider ought to clearly detail what is expected of the vendor, how the work will be monitored and how to handle disputes about the vendor’s performance.

Given the scope of what’s being required and the vast amount of data involved, monitoring third parties to comply with the regulations can seem like a daunting task. In fact, it’s rare that a lender has the capability to truly manage the surveillance and oversight of third parties. The good news is that there are products and services available today specifically designed to help mortgage lenders manage third party relationships in an efficient and compliant manner. However, not all vendors offering this service monitor third parties on an ongoing basis, so it’s important to ensure that the vendor or service you choose provides continuous updates on all of your third party relationships.

A final word here: Third party oversight has always been important and good for business, but it’s become even more important to regulators and the GSEs. Clearly, protecting the consumer is the ultimate goal, and someone needs to be held accountable for any missteps in the mortgage process. That means lenders are being held to a higher standard when it comes to managing their third party relationships; otherwise they risk facing enforcement actions, including fines, cease and desist orders, and other penalties.

It’s never too late to get started on managing third party relationships. If you want to keep your business and your customers safe, the wise move would be for organizations to clear time on the schedule, do some serious planning, and leverage the proper services and tools so this extra responsibility becomes a strength and not a liability—and so you can continue to focus on your core business.

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Holiday Gifts For Housing


TME-PHhallYes, it is that time of year again. And in the spirit of the holiday season, I gladly pull out my bag of goodies to distribute to the most significant, provocative and ridiculous participants in this year’s world of housing finance and mortgage banking. This year’s gift giving goes along these lines:

Edward Pinto and Stephen Oliner: A Gold Medal for Innovation. Incredibly, the year’s most innovative housing product was not introduced by a financial services company, but by a right-of-center Washington think tank. Pinto and Oliver are co-directors of the American Enterprise Institute’s International Center on Housing Risk, and their Wealth Building Home Loan is, hands down, the most exciting new product to be introduced in too many years. The loan is currently being tested in pilot programs with the Neighborhood Assistance Corporation of America and Bank of America, and here’s hoping that the success of this product will finally spur lenders to begin plumbing the much-needed innovation that the industry has been hungering for since the dawn of Dodd-Frank.

The MBA Opens Doors Foundation: A Gold Medal for Philanthropic Outreach. This charitable arm of the Mortgage Bankers Association rarely gets the level of attention it deserves. And that is a major shame, because its mission – providing mortgage assistance for families with sick children – is not only serving a vital purpose in the lives of many homeowners, but it beautifully refutes the lies spread by the industry’s detractors that mortgage bankers are only interested in raking in money and kicking people out of their home.

Senator Elizabeth Warren: A Dunce Cap. Whether she’s launching surprise attacks on Mel Watt over principal reduction or pocketing $525,000 for a book in which she babbles about income inequality, the Massachusetts senator has gone out of her way to make a fool of herself without actually accomplishing anything that could be defined as a legislative triumph. Maybe next year she will finally do something of value. And here is an idea: perhaps Warren could recall her supposed tribal heritage by donating her extraordinary book advance to finance scholarships for the American Indian College Fund.

Extell Development: A Calendar and a GPS. Extell Development is the company behind a New York City luxury high-rise that, as per municipal guidelines, must have a certain number of affordable housing units. However, their building is being designed with a separate entrance for the resident of the affordable housing apartments – Extell thought it was disgusting to have lower income people occupying the same lobby and elevators as the building’s upper income residents. My suggested holiday gift may remind Extell that we are living in 2014 America and not in the France of Marie Antoinette.

The U.S. Department of Housing and Urban Development: A Copy of its Original Mission Statement. What in the world has happened to HUD? In the half-century since its inception, HUD has gone off on bizarre tangents that include an annual “Reconnecting Families and Dad’s Program” (which has nothing to do with either housing or urban development), “Promise Zones” in areas that are not in need of federal funding (including Hollywood, of all places!) and an arm-twisting campaign to force providers of affordable housing to commit to the installation of expensive on-site renewable energy solutions on HUD-assisted multifamily housing. Meanwhile, affordable housing has evaporated in many major markets despite HUD’s worthless efforts to correct the problem, while the department’s leaders – along with the White House – have stubbornly refused to push for the expansion of the Fair Housing Act to protect gay and lesbian Americans that have no legal recourse to fight against housing discrimination in nearly half of the country. To be blunt, HUD is an embarrassment, and I am hard pressed to argue why it should be around for another 50 years.

Brandon Friedman: A Volunteer Job at a Veterans Hospital. Friedman is HUD’s deputy assistant secretary for public affairs, and last spring he took to Twitter to question the sanity and honesty of U.S. military personnel that openly called into question the reasons behind the disappearance in Afghanistan of Sgt. Bowe Bergdahl. Why was a HUD bureaucrat talking about this? Who knows, but his disgraceful badmouthing of the men and women of the U.S. armed forces was thoroughly inexcusable. The holiday gift chosen for him might serve as a reminder of the painful sacrifices that our nation’s military heroes have given in order to preserve the freedoms we often take for granted.

Cher: Membership in the Mortgage Bankers Association. Another bizarre Twitter rant involved the iconic singer and Oscar-winning actress, who took online aim at Zillow, of all things. Her October 15 stated, “#CHINA IS ON REAL ESTATE BUYING SPREE ALL OVER USA. #ZILLOW Has Agreed 2Make Their Listings Available 2 CHINESE CONSUMERS. BOYCOTT #ZILLOW.” I am not certain whether Cher is angry at China, at Chinese investors in U.S. real estate, or in Zillow for listing properties that Chinese consumers may want to consider. In any event, maybe Cher can take a break from her concert gigs and allow Dave Stevens and his team to offer a crash course on how the real estate finance industry works.

Yes, it has been an interesting year. And I would like to take this moment to thank this column’s readers for their continued support and input. I am taking the next two weeks for a holiday break, and I hope to reconnect with everyone in 2015!

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Don’t Fear An Audit

Are you afraid of a visit from the CFPB? Most lenders and vendors a like, are. However, not every audit needs to be the source of tension. In the article “Recommendations for a 1 hour brand audit process” by Smart Insights, the author says there could be a number of reasons for carrying out your brand audit and there are as many metrics to be considered in order to get the answers, as far as the reception of your brand is concerned.

It’s a crowded mortgage world, so your brand needs to stand out and a regular brand audit will make sure that you stay different. So, what is included in a brand audit? You may be looking to acquire more customers, or your business may have taken a downwards slope, or maybe your revenue is going down. No matter what, even if your business is doing well, it is essential to do a regular online brand audit.

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Why should every business carry our a brand audit? The reasons include:

>> Position of your business: A thorough brand audit gives you a complete report about the current position of your business. This includes rankings on search, engagement on social media, and how you stand against your competitors.

>> Discover the strengths and weaknesses of your online marketing: A brand audit shows the strengths or the weaknesses that in your overall branding techniques. It also helps you in knowing if your weaknesses are dominating to an extent that your online engagement rate, conversion rate are declining.

>> Helps in meeting the needs of your prospects: Your prospects are looking for some information, products, or services online. Your audit will help you in knowing exactly what drives their decisions to turn them into your customers. It could be a product, a content strategy, a landing page that could have propelled a certain action from your prospects.

>> Understand audience perception about your brand: It will help you understand exactly how your brand is being received by your prospects. There may be times when a customer could have been unsatisfied with your services, resulting in a negative online review. On auditing your brand, you will be able to know the trouble points within your business and sort them out.

Here’s what you should ask yourself during one of these audits:

>> How is your brand received by your audience? A thorough analysis of your brand perception is a must; it lets you know what the audience sentiment is.

>> Is your brand message clear? One mistake many brands make is that they beat the same story to death in their content marketing strategy, boasting about themselves and their achievements. Your audience wants to see something that could relieve their pain points. That is why they are coming to you in the first place. This helps your brand in establishing an authority in their thoughts.

When it comes to marketing, you will find it tough to argue with anything that Google comes up with. They deliver services in the simplest form. With this brand message, not only does Google advertise the spirit of their own innovation, but also encourages self-discovery telling the audience that they have the potential to make the best out of web. It sounds commercial and also tells us that passionate people could make the best out of the web.

>> What is the customer persona? Are you targeting the right audience? All your marketing efforts should focus on your customers, and you should be recognizing the ideal customer and base all the efforts on that analysis. What is the age, gender, job profile of your customer, in addition to his decision taking ability and the pain points are some of the major points that help in identifying the customer persona? The brand audit will go nowhere if you don’t know what you are targeting.

>> Are your customers fulfilling your required action? You may be looking to increase your followers, or send across a social message, or even enhance your conversion rate. For each and every thing that you want your audience to perform, you will need an effective call to action, which forms an integral part of your brand promotion, and hence, your brand audit.

The most effective brand audit processes are:

  1. Find how your company is referenced across the Internet

With the help of numerous online tools, you will be able to see your brand mentions across the web. There are a number of things that you could know by monitoring your brand:

>> Where you are doing a good or a bad job?

>> Which are the areas that need improvement?

>> What is the customer/audience base?

>> What is the need of the customer?

>> Are there some bad reviews about your brand?

>> Is the customer suggesting something?

  1. Analyzing the content

It could be tedious analyzing a website’s content, however by now most online marketers and brands admit to the fact that website content plays a major role in establishing a brand. A well planned SEO audit of the website content is mandatory for the overall brand audit:

>> Check out the ranks of the pages and see for which terms the pages are ranking.

>> Identify the purpose of the page and its content. Do they both justify each other?

>> Is the content on the webpage delivering on the expectations of the business?

>> Is the information useful to the target audience?

>> Find out if the page has been duplicated on some other website?

>> See if the page has all the targeted keywords used in search by your target audience. The same applies to the URL of the page, meta-descriptions, title, and the body.

>> In addition to the website content, your offline content is something that adds to your credibility. Thus check out all content that you have published as a guest writer to see the popularity, comments, if it is useful to the audience. Also check if the information in the content is in tune with the current trends.

  1. Claim your profiles

Most of the online directories will give you the option to get ownership of your company page, so that you could edit the given information any way you would like to. The verification process involves confirmation via the email sent to you. Once you are verified, you will have a quick access to your company’s account and could update the information.

  1. Analyze Traffic

It is worthwhile analyzing the traffic that is being generated through the website. An essential part of your brand audit is how much your website is able to attract as far as your visitors are concerned. Just sit down, take a deep breath and look through your Google Analytics that will give a lot of information.

  1. Feedback from company employees/associates

Your sales team plays an important role in your overall brand enhancement process, as they are in direct touch with your prospects. They know how your brand is being looked upon by your prospects. In addition to that, you could have a reseller tell you how their customers feel about the products or the services that you have sold through resellers.

  1. Value Proposition and how you stand out from your competitors

What is your value proposition? How do you define your brand? How do you stand out from your competitors? Check out if you are stating your value proposition and that it clearly defines your goal to the customers. The brand should be described in a clear cut way. Everything associated with your brand – the brand name, logo, content, pictures, should all be copyrighted to avoid any hassles later.

  1. Survey your customers

A great way to know brand perception is by running online. It is a quick and effective way to check how customers feel about your brand. There could be many questions pertaining to your brand that you could ask your customers.

  1. Monitoring your social media presence

The aim of the social media audit is to help the businesses in identifying the best ways to utilize social media.

Managing your online brand requires an ‘always-on’ focus and dedication from a team to continuously review and improve your online interactions.

About The Author

A New Burden In The Digital Era


MargoTankKate Aishton 5 x 7Financial institutions have a double burden when facing the digital era: keeping up with changing technology and keeping up with regulators’ attempts to respond to and encourage those changes. In response to consumer demands, financial institutions are developing mobile apps and mobile-responsive websites of their own. Their consumers want access to the goods and services they once got from brick-and-mortar stores (or their PCs) on their mobile devices. To provide the convenience they have come to expect, financial institutions need to utilize methods for creating the most attractive, responsive and effective mobile products possible. At the same time, regulators have focused significant attention on how banks and other entities they oversee can use Internet-based tools to impact consumers.

A/B Testing

A/B Testing is one standard protocol for developing and improving web products. It calls for presenting two versions of a product to different groups of users and measuring their reactions against a metric of success. Despite being “industry standard,” this approach is receiving increased criticism from consumers and may be risky for financial institutions.

A/B testing recently dominated conversations regarding Facebook’s treatment of its users after it presented upbeat or depressing stories to different groups of users and then collected and shared the resulting data about the users’ behavior. This move caught tremendous flack in the media, including claims that Facebook may have manipulated consumers. Facebook and its defenders noted that this sort of testing is routine at technology companies. Presenting different versions of a product to different sets of users and comparing the result is an effective, common tool for evaluating potential development strategies. Such testing allows developers to treat qualitative factors quantitatively, providing clear evidence of what seemingly personal preference will actually have the greatest usability impact.

As mobile products reach into ever more sensitive corners of consumers’ lives, this approach is gaining increased scrutiny.

The Risks

A/B testing may be a foundation of good development for the larger world of mobile, but financial institutions entering the mobile market should consider some potential liabilities:

>> TILA/RESPA: Regulators are beginning to recognize that disclosures cannot be created for mobile devices under the same restrictive font and other requirements that apply to paper disclosures. However, even those disclosures have been loosened and remain ambiguous, without concrete agency action or comment to describe what is and is not, acceptable in terms of delivery and appearance. The A/B testing context presents a particularly risky situation, as regulators may see two versions of a set of disclosures as favoring one set of consumers over another.

>> Abusive Acts and Practices: While all companies must avoid unfair and deceptive acts and practices under Federal Trade Commission (FTC) jurisdiction, financial institutions have to consider the more ambiguous authority of the Consumer Financial Protection Bureau (CFPB) over abusive acts and practices. Even if a financial institution’s privacy policy explicitly includes the right to use consumer data for product testing and research, the CFPB still may find certain uses (for instance, experiments to discover approaches that encourage users to take higher-interest loans) to be abusive if they “materially interfere” with a consumer’s ability to understand a term or condition of a product or service, or “take unreasonable advantage of a consumer’s lack of understanding” of any associated terms, costs or conditions. For financial institutions, disclosure alone may not solve concerns about testing.

>> Gramm-Leach-Bliley Act (GLBA): Using an outside app or web development vendor may streamline product creation, particularly for smaller companies, but the introduction of a third party creates GLBA complications for financial institutions. It may be unclear which party is actually doing the A/B testing or collecting the related data, increasing chances of accidentally ignoring a data-sharing opt-out request required under the Privacy Rule. Involving third parties also creates additional burdens on the information security programs required by the Safeguards Rule.

>> Future Regulation: The CFPB has zeroed in on mobile financial services, requesting information from the public, hosting a field hearing on the topic and promising to release new rules for mobile by the end of the year. CFPB Director Richard Cordray specifically noted that the agency is investigating the information banks are collecting from their consumers and whether they are “using their data to target [low-income consumers] for high-cost products.” An A/B test designed to evaluate different pitches for a new loan product could be perceived as demonstrating this behavior if presented to the wrong users. Bad press on testing gone awry would draw negative attention at a crucial moment and may lead to enforcement action or stricter rules.

>> Consumer Trust/Reputational Damage: Facebook’s recent matter demonstrates that regardless of the legal implications, getting on the wrong side of public sentiment regarding consumer manipulation is at best a distraction and waste of company time and resources. For financial institutions, organizations with which consumers trust with their most sensitive information, this is even truer. Imagine the backlash from users misinformed about their access to credit or account due dates, or who find out that data about how they handle their money was shared with researchers.

The Solution

Avoiding mobile is not an option for financial services companies that want to remain competitive, satisfy customers and ensure they are engaged with their products and services. Mobile financial services are here to stay, and providers must focus on creating the best mobile experience while reducing the risks associated with app and website development. Financial companies must think beyond the standard A/B testing box: focus groups, opt-in programs and surveys – all of which may require additional planning and incentives, but will help avoid many of the legal and reputational obstacles that quietly testing a user base raises. With thoughtful planning and a little creativity, A/B testing will produce desired results without collateral damage or undue risk of negatively impacting their customers.

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What Sales Pros Want


More than 100 Dreamforce attendees recently shared their answers to five questions from Wizeline about what sales professionals want from product managers.

“When sales leaders lose, they want to know why,” states Wizeline in the following infographic. “Compared to non-managers, sales VPs are 50% more likely to say it is ‘very important’ to have analytics identifying product gaps that cause them to lose deals.”

By comparison, sales reps are 50% more likely to say that having analytics on features that help them win is very important.

Moreover, 86% of sales professionals surveyed said it was “important” or “very important” to have a seat at the table when their product team is defining their company’s product road map.

To find out more about what sales pros want from product management, check out the infographic:


What’s Ahead In 2015?


TME-TGarritanoI talked to Les Acree, EVP, Wholesale Lending of Freedom Mortgage Corporation; Mary Beth Doyle, founder of Loyalty Express, a provider of marketing automation and cloud-based CRM solutions for mortgage companies and banks; Phil Huff, CEO of Platinum Data Solutions, the premier provider of collateral evaluation and quality technologies for the mortgage industry; and Eric Wilson, VP, head of mortgage sales of Genpact Mortgage Services, a global leader in transforming and running business processes and operations, helping clients become more competitive by making their enterprises more intelligent; about 2015 and they had some interesting things to share. Here’s a bit of my conversation with these experts:

Question: What can lenders expect from regulators in 2015?

Mary Beth Doyle: It’s exciting that Fannie Mae announced plans to loosen guidelines to get more homebuyers into homes. However, when a new product or regulation comes out, lenders need to get up to speed with it to explain the product to the buyer. After that happens, it’ll be great for the purchase market.

Les Acree: Lenders like us will participate in that product if Fannie Mae participates. You can’t loosen the guidelines and then hold us accountable. We require a 4506 on every file, we do a fraud check, we use Lexus-Nexus, so we are checking and double checking everything. Regardless you can still get loans pushed back to you on a technicality from the GSEs.

Phil Huff: We’ll see a vibrant focus of the third leg of the stool. There hasn’t been as much focus on the value of the appraisal. Fannie announced their collateral underwriting tool, which will change that in 2015.

Mary Beth Doyle: The environment is intense, so there’s more focus on compliance vs. offering something new.

Question: Will the Republicans have the ability to deregulate the mortgage market?

Phil Huff: GSE reform is such a daunting task. So, I don’t think that’s going to happen. You might see momentum building around merging the GSEs, but it won’t happen next year.

Mary Beth Doyle: Any time there’s a political change, there’s a lot of media emphasis. So, we’ll see a lot of excitement and fear, but I’m not sure that much will change.

Les Acree: We think the regulatory bar will continue to get raised. If we talk about the CFPB, they are the only non-regulated regulatory body. We as a lender follow the rules. With the Republicans in charge the CFPB might be regulated more.

Eric Wilson: The CFPB is slow moving. I’d like to see the results of what they’ve done thus far before we start talking about oversight.

Question: What will be the most difficult challenge for lenders next year and what steps can they take to address that challenge?

Mary Beth Doyle: Recruiting able young college graduates will be a challenge. We are experiencing an aging workforce in mortgage lending.

Eric Wilson: Cost will continue to increase as volumes decrease. Lenders traditionally throw heads at the problem during refinance booms so now lenders are left with a lot of inefficiencies that they didn’t address when refinances were booming. Lenders need to look at new technologies like borrower portals, e-signatures, OCR, etc. to improve the process. Lenders also need to look at outsourcing as an option. You need both a technology and a people solution.

Phil Huff: In 2015 lenders will adjust to the new normal. There’s a whole segment of our population that is wary of getting back into the mortgage market. It used to be that the goal of a 25 year old was to get married, have kids and buy a house, but that’s not the case. Today 25 year olds are more concerned about getting a good cell plan. They don’t want to be tied down. They want to be mobile.

Les Acree: For the past three years everyone has said that rates are going to go up, but they’ve gone down. However, I really do think that 2015 will be the year that they go up. Regulation will dictate which technology you’re allowed to use. There is very little continuity in the process and that’s all dictated by my legal and compliance department. We are all going to adhere to the regulations, but we’re all going to do it a little different.

Question: Lastly, define the state of innovation.

Mary Beth Doyle: We see a lot of innovation happening. You are seeing innovation around training programs, partner programs, marketing, etc. Lenders are trying to aggregate their data. Lenders and loan officers are really starting to benefit from new systems and technology.

Phil Huff: I don’t think there’s a lack of innovation. There’s a lot of very smart people in our industry. This industry is distracted by regulation and there is not as much time spent by lenders in adopting technology. The industry is slower to adopt new technology right now because of the legislative morass, but innovation is happening.

Les Acree: There is a substantial amount of innovation. However, we are always asking about compliance when we adopt new technology, which I think hampers our ability to be more creative as a lender. There is more technology then there has ever been. We have a lot of qualified service providers in our space.

Eric Wilson: Innovation is key to our industry’s success. The challenge is how do you innovate in a market where the production costs are as high as they’ve ever been and volumes are decreasing. The ability to have technology that doesn’t require the full lift out and replace of your exiting LOS is essential. Incremental innovation will happen in 2015 and beyond.

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The Key To Successful REO Disposition


joebadalamentIncreasingly complex REO inventories complicated by ongoing market pressures and a more demanding regulatory environment are placing asset managers under significant pressure to compliantly reduce REO inventories, while minimizing portfolio losses. This REO environment will continue to drive the agendas of asset managers and their REO asset management partners as both work to improve and streamline REO disposition processes.

In these extreme market conditions, it has become increasingly difficult to sustain property-specific marketing strategies. Time constraints and sheer number of regulatory requirements reduce the focus on individual properties in favor of volume-driven approaches. Ironically, the resulting one-size-fits-all solutions have often had the opposite of their desired effect, leading to longer disposition cycles and lower selling prices.

To improve REO marketing and disposition results, stronger field execution is paramount. Servicers need to look for an REO asset manager with a nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties.

This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

Using a National REO company that has an army of local broker’s rather than an arm’s length National Broker with little to no local expertise, significantly enhances the asset manager’s return on property sales.

The local real estate agent has a better knowledge of prospective purchaser expectations, such as price in relations to neighborhood values based on past neighborhood sales and expected amenities which translate into a higher sales price and a quicker turnaround time.

A nationwide network that includes both local brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient and effective approach for each asset in the lender’s REO inventory.

In addition, field service companies must demonstrate the ability to handle both quantitative (volume) and qualitative (depth of service) market demands. Meeting this dual-track challenge requires a large, nationwide field service team? The key is rapid deployment of field resources on a neighborhood-by-neighborhood, property-by-property basis. Providers who can perform at this level are re-defining responsive REO service.

End-to-End Control

Asset managers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turnkey auction management or assigning a broker, as appropriate.

Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most important, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

Effective marketing is critical to successful REO asset disposition. However, to be consistently effective, REO Marketing is best understood as part of the overall asset management process, not a substitute for it.

Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process – is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

Closing Services – Well-qualified REO asset management organizations can provide the people and expertise to coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information? All in strict accordance with client, legal and regulatory requirements. Title procurement, HUD-1 review and approval, escrow/closing coordination? These capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

Understanding REO Disposition

With today’s increasingly complex REO inventories, not all properties are suited for sale through traditional channels. Alternate strategies, particularly for low-value, high-risk properties, must be identified, assessed and implemented, as appropriate. REO asset management providers with strong field service networks can be highly effective partners in helping to leverage these opportunities, whether large-scale bulk transactions, transfers to development agencies or public auction. That said, property-by-property marketing continues to represent the most effective alternative for the majority of REO assets.

Property-by-property optimization of REO assets requires independent process management and localized control. What’s needed is an REO asset management partner who knows the property and its pre-sale history, can plan and execute property preservation/enhancement services, understands municipal ordinances and code compliance issue, and can objectively assess, select and manage local brokers.

The Right REO Marketing Partner

With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-sale services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods and preparing a detailed property/market analysis, as well as providing turnkey auction management or assigning and managing a broker, as appropriate

The right REO service provider can deliver maximum REO results in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns and property-by-property follow up, including ongoing detailed progress reports.

Most important, they can assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length broker relationships characteristic of many REO asset disposition programs. Successful REO asset disposition means, first, knowing the property and tailoring a marketing strategy to match; and second, being able to apply independent, on-the-ground monitoring of the disposition process. Integrated REO asset management companies with strong field service networks are uniquely qualified on both fronts.

Multifaceted Approach Key to REO Disposition

The fact is, disposition of REO assets is a multi-front affair. Success means winning a series of small but important battles: It takes knowledge of the property and local market awareness to critically assess BPOs and the brokers who provide them. It takes experience and follow through evaluate and monitor property marketing activities. It takes strong field presence to assure the grass is cut, trash is removed, interiors aren’t gutted or vandalized, the HOA isn’t ready to enforce a lien, and fines for municipal code violations aren’t accruing. It takes people, skills and know-how to negotiate cash for keys.

Integrated REO asset management providers with proven pre-sale and post-sale capabilities are in the strongest position to help lenders/servicers address these and other needs critical to REO asset marketing success.

Not All Networks are Created Equal

Field service network strength is an important predictor of REO program success. Certification and training are essential to assure that inspectors, contractors and other network members are properly qualified for the field services they provide.

This requirement favors REO service providers with permanent nationwide networks whose members are carefully screened and required to demonstrate ongoing adherence to strict industry licensing and performance standards. Providers whose field service teams are recruited on an as-needed, ad hoc basis may find it difficult to satisfy this requirement.
Dynamic Asset Management Technology

To optimize their advantages, leading REO service providers incorporate advanced management technology into their programs, enabling servicers to monitor and evaluate every aspect of their REO program, as well as property pre-foreclosure events, with paperless, point-and-click convenience. Fully effective REO process management technology allows lenders and their service partners to organize and track all REO tasks and events; maintain communications with all parties in a real estate transaction; meet all regulatory and lender requirements, and assure a clear audit trail.

Technology can also improve on-the-ground performance and efficiency. For example, enabling contractors to enter critical data directly from the property location enables them to instantly verify property status.

The Future of Successful REO Disposition

Improving and streamlining default and REO processes will remain a primary focus of asset managers and their field services partners as the need for compliant REO marketing and disposition continues to grow as regulatory compliance becomes more urgent and complex.

Long-term success will favor REO service providers with integrated field service networks, innovative technology and broad-base expertise needed to deliver end-to-end REO solutions that optimize REO results.

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