Grow Your Business


ATTOM Data Solutions released its Q4 2016 U.S. Residential Property Loan Origination Report, which shows more than 1.7 million (1,748,177) loans were originated on U.S. residential properties (1 to 4 units) in the fourth quarter of 2016, down 15% from the previous quarter, but still up 2% from a year ago. More than 7.3 million loans were originated in 2016, up 2% from 2015 to the highest total since 2013. Total dollar volume of loan originations in the fourth quarter increased 8% from a year ago to more than $461 billion ($461,291,961,501). So, what do these industry dynamics mean for lenders? Lisa Schreiber, EVP Operations at Sprout Mortgage, talked to us about what lenders need to do in order to thrive in the current mortgage market. Here’s what she said:

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Q: What’s ahead for Sprout Mortgage this year?

LISA SCHREIBER: We are growing our product line. We are not just offering more products, but new services, as well. We are growing our national sales strategy across the country. We’ll be in all channels of business. So, we’re very excited about 2017.

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Q: What are Sprout’s technology priorities this year?

LISA SCHREIBER: We are building out automation for decisioning on non-QM products. We are working with a vendor right now. That technology will be embedded in our LOS and we’ll white label it for our correspondents. I’m looking to find good tools to obtain documentation without putting that responsibility on the borrower. We want to help the borrower through the process and put less of the burden on the borrower to provide paper documents like bank statements, W2s, etc.

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Q: What do you see as the future of straight through processing?

LISA SCHREIBER: When I was at Ellie Mae we were talking about mortgage as a manufacturing process. We can do a much better job of accessing client data upfront. We need to be clear upfront and have triggers throughout the process that constantly keep the borrower informed.

Q: How does the mortgage industry craft a process where the user experience has no friction?

LISA SCHREIBER: No friction is difficult. It goes back to how we can better enable borrowers. I have daughters in their twenties and they don’t like to talk to people as much as we do. They want to do things with the push of a button and they want to be informed at every step, as well. So, it’s a combination of technology and people power.

Q: How will the recent governmental changes impact the mortgage market in 2017 and beyond?

LISA SCHREIBER: The big headline for us is Dodd-Frank. Several people, myself included, do like more structure. However, the timelines set up by Dodd-Frank are a little crazy though. I’d like to see some portions of the regulation go away, but not everything all together. It’ll be interesting to see what happens to Dodd-Frank. When they say they want to get rid of regulation, what does that mean?

Q: When evaluating their technology strategy, what elements should lenders keep in mind?

LISA SCHREIBER: There’s no one technology that is going to be everything to everyone. Lenders need to really think and plan first. Most times lenders just grab a piece of technology and build it out because we’re still doing loans and we still have to make a profit. We don’t always whiteboard or analyze things fully before buying a piece of technology. There should be someone in the organization that is always thinking globally. It’s hard to plan everything out, but some times you spend more resources to fix new technology then you should.

Q: What is perhaps the single biggest misconception lenders believe regarding technology?

LISA SCHREIBER: That it will solve all of their problems. That it will work when you turn it on. That it will instantly solve the problem without the lender having to put much thought into it. It’s not going to automatically work and not everyone in your company is going to automatically understand how to use the new technology.

Q: What do lenders need to do in 2017 to remain competitive?

LISA SCHREIBER: Lenders have to assess cost and try to manage cost better. We are coming out of refinance boom so people spend a lot of money getting to all the refinance business, but that changes in a purchase market. Lenders have to adjust to spending their money wisely in a purchase market.

Industry Predictions

Lisa Schreiber thinks:

1.) Interest rates will rise, but not by too much.

2.) It’ll be a terrific year for purchase volume.

3.) There we be a lot of product development and new products entering the market to address particular borrower needs.

Insider Profile

Lisa Schreiber is EVP Operations at Sprout Mortgage. She is a true mortgage industry veteran that has worked with lenders, technology vendors and as a consultant. She was a Regional VP at Bank of America; EVP at American Brokers Conduit; EVP of Wholesale Lending at TMSFunding Wholesale Lending; VP of Correspondent Lending at New Penn Financial; VP, Lender Business Development at Ellie; President at LSK Consultants, etc.

The Real Customer Experience


How can mortgage lenders be more successful? For years, the focus was on lowering costs and squeezing out as much efficiency from the staff as possible. While those are still key factors to a lender’s success, lenders are also recognizing the impact a strong customer experience has on the company’s success.

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Customer service and the customer experience have always been important to lenders. But now, due to social media, customers’ opinions and experiences can have a much broader impact on the bottom line. Social media has given anyone a platform to spread one’s perspective, whether positive or negative, on a company. This has shown the importance of having open communication with borrowers and providing a superior customer experience.

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The customer experience is not just a concern for lenders working with borrowers, though. Vendors who provide critical technology and services to lenders should also keep in mind that building a strong user experience for lenders is necessary for continued success.

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What does a customer-centric vendor look like? Here are three characteristics shared by technology vendors dedicated to building long-term relationships with lenders.

Understand What Lenders Want

Often, the first thing that comes to mind when talking about customer or user experience is customer service. And yes, a culture of outstanding service is very important. However, providing a great experience is more than just providing outstanding service.

Having a wonderful product that meets a demand is one of the primary factors in defining a positive customer experience. To ensure lender satisfaction, the product must work as advertised, be easy to use, and be supported by a strong support and training team.

When evaluating technology providers, lenders are looking at a few key items.

First, does the product deliver all of the promised services? Nearly as important is usability. Are staff members able to improve productivity and efficiency by using the software?

Secondly, lenders want to be confident that the cost is transparent and fair. Most lenders are not shopping solely based on price. However, nothing ruins the vendor/partner relationship faster than surprises in the total cost of the service or product.

Finally, lenders want to know they have easy access to your staff when they need answers quickly. This is where a strong customer support infrastructure is vitally important.

Design Products Focused on the User Experience

To build a culture focused on lenders, mortgage technology providers should keep a few things in mind. The first is when it comes to designing updates and new services, put yourself in the users’ shoes.

Think through how the lender will interact with the software. What is the typical user experience when using the software? Are there key differences power users experience that are obstacles to getting the most out of the software?

Ultimately, a lender is going to stick with software for the long haul if it not only increases profit and efficiency, but also makes the lender’s job easier. Lenders are also making more efforts to build borrower-centric businesses, so mortgage technology that helps the lender deliver a better borrower experience is more valuable. Perfect examples of this type of service include online mortgage applications and servicing platforms that provide borrowers easy access to online account statements and payment services.

Making current and emerging technology work for lenders is the direction mortgage technology vendors should be moving in. For example, we at FICS created the Mortgage Servicer API to work with our main servicing solution. The API has enabled our servicing customers to execute their end-of-day process, monthly investor reporting, and generation of borrower statements without staff intervention, allowing the automated interaction of tasks between multiple systems, such as a servicer’s core system or other vital programs.

Listen to the Lender to Constantly Improve

The final step to building a customer-centric business is to remember that it requires constant improvement and analysis. In order to remain relevant, technology providers must listen to lender feedback to stay competitive.

There are several ways to gather this information. Formal and informal surveys are easy to set up, and they provide snapshots of how users feel about the product or service. Some technology providers even provide regular forums – both virtual and in-person – for lenders to share feedback, make suggestions for enhancements, and provide additional training. At FICS, we provide our users the opportunity to suggest software enhancements throughout the year and an enhancements survey that is discussed and voted on during our annual Users’ Conference.

Vendors can also look to unstructured data, such as evaluating service logs, to seek out common issues. Are there ways to change the product or the training to better address the most common issues?

Building a lender-focused business is the best way to build long-lasting partnerships and ensure that your technology services and products remain viable to lenders for many years. Making the customer or user experience a high priority at every level of the organization – from product design, to sales, to training and support – is the key to helping lenders best navigate the current lending environment.

About The Author

Susan Graham

Susan Graham is president and chief operating officer of Financial Industry Computer Systems, Inc. (FICS), a mortgage technology specialist that provides cost-effective, in-house mortgage loan origination, residential mortgage servicing and commercial mortgage servicing technology to mortgage lenders, mid-sized banks and credit unions. As president and COO, she is responsible for the overall management of the company’s day-to-day operations, strategic planning, customer relations and product development.

The Changes Ahead


With the recent announcement by the new administration that the Dodd-Frank Act would be reviewed, lenders began anticipating the reversal of the numerous regulations put in place after the mortgage crisis of 2008-2009. The creation of the Consumer Financial Protection Bureau (“CFPB”) brought with it a plethora of new requirements and restrictions on all types of consumer lending, not just mortgages. However, mortgage lenders, identified as the drivers of the financial collapse, were without a doubt the hardest hit, and not just with regulations. The CFPB exams, which many times resulted in penalties and fines for lenders, were particularly onerous as were the costly technological revisions that the new regulations required. But before we pop the bottles of champagne, we need to take a minute and consider what exactly is likely to happen and what these changes will actually mean to mortgage lenders.

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Recognizing that any changes in the current regulatory environment must come through Congressional action means that regardless of how urgent we feel that these changes are needed they will take time to accomplish. While the expected timing of the changes varies greatly, we can also expect a tremendous amount of push-back from proponents of the current regulatory environment. In addition, the proposed changes will require significant legal review as the depth and breadth of the current regulations impact much more than mortgage lending. One other thought to keep in mind is the old saying “be careful what you wish for, you just may get it.” So, while there is intense anticipation of the elimination of Dodd-Frank, we need to be prudent and carefully evaluate what is included in each proposal and thoroughly evaluate the potential impacts, both positive and negative. Having said that, let’s look at what is on the table already.

One of the first agenda items is the removal of the current director of the CFPB, Richard Cordray. The current law calls for the agency to be funded through the Federal Reserve and be run by a director appointed by the president with no oversight by Congress. This has been a very sore spot for lenders as they perceive the current director’s actions to be especially punitive, if not downright malicious, toward mortgage lenders. When the results of the litigation involving PHH were made public, the fact that the court felt the current structure was unconstitutional, generated great anticipation that the new administration would immediately fire Cordray and replace him with someone of their choosing. This of course did not happen as it was widely anticipated that Cordray would not simply walk away without a legal battle to retain the position and the existing structure of the bureau. However, the week of January 31st saw the introduction of a Senate bill that would replace the single director with a five-person bipartisan committee.

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The Choice Act

In other action, Representative Jeb Hensarling, Chairman of the House Financial Services Committee, introduced his bill to dismantle the Dodd-Frank Act. In conjunction with statements made by members of the administration, the bill has been widely announced as the “newly improved” Dodd-Frank. This bill does not entirely dismantle what is currently in place but would make changes to some of the lesser known elements of that regulation. For example, this bill, known as the Financial Choice Act would end taxpayer funded bailouts of large financial institutions; relieve banks that choose to be “strongly” capitalized from regulations that are viewed as preventing growth; impose tougher penalties on those that commit fraud and hold federal regulators more accountable for the financial health of the country. This House bill would also replace the director position with a bipartisan committee and changes the name of the organization from CFPB to the Consumer Financial Opportunity Commission (CFOC). An evaluation of this bill by Fitch concluded that this new commission would retain many of the elements of the current CFPB but would put reasonable controls over its authority by mandating congressional oversight and appropriation requirements.   It has also been noted that the bill would in fact widen the mandate of the original agency and provide more protections to consumers.

While all of this sounds favorable to “big banks” there does not seem to be much in it for the independent financial institutions and/or independent mortgage lenders. The expectation from this legislation for non-banks appears to be limited to the lowering of compliance costs and potentially fewer fines. It is possible that this legislation could drive an even bigger wedge between those that benefit and those that get very little relief from its passage.

One thing to keep in mind is that this bill must be vetted through both houses of Congress where numerous changes and addendums are likely to occur. Furthermore, it is important to note that there are less than two years before all members of the House of Representatives and one-third of the Senate will be up for re-election. What we don’t know at this time, is what resistance this bill will receive in both houses of Congress.

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Overall consumers and Consumer Advocacy groups appear to be very pleased with what the CFPB has accomplished. If they see this bill as a weakening of the protections provided under the CFPB will the response be sufficiently derogatory to forestall or significantly change the bill. In addition to consumer groups, realtors are also keeping an eye on the bill. While not impacting them directly, the resurgence of the housing market has been extremely beneficial to them and they are anxious not to change anything that will ultimately dampen home-buyers’ enthusiasm.

Fannie Mae and Freddie Mac Reform

Another topic of discussion within the past week was the introduction by the MBA of its position on what should be done with Fannie Mae and Freddie Mac. While this is only one of the entities expressing its thoughts and recommendations these days, it is clearly one of the most thoroughly vetted positons and is expected to carry a great deal of weight with Congressional leaders.

Based on the document the MBA supports a new approach to the secondary market. One point of emphasis in this proposal is the role of the federal government and the necessity of preventing this new “market” from fluctuations due to political turmoil, favoritism and/or changing administrations.

The introduction document identified four critical elements that the MBA task force concluded must be part of any long-term solution. These include establishing the value of combining competition and regulations; providing equal access for all lenders regardless of size or structure; enhancing their current public mission for promoting affordable housing and finally, to maintain the level of liquidity for both single and multi-family housing.

In a shift, away from the exclusivity present in the current market, the MBA recommended that the new Fannie Mae and Freddie Mac be organized as private utilities with a regulated rate of return and a public purpose of providing credit to the conventional mortgage market. They also indicated that these entities should not be the only such organizations available for aggregating and securitizing loans. The document encouraged the development of private utilities that would compete with these agencies thereby allowing for a more competitive secondary market.

MBA’s position also included a series of controls which they labeled “Guardrails” that must be implemented to reinforce this new mandate. Among these are such standards as the maintenance of a “bright line” between the primary and secondary markets; these utility companies must be standalone to prevent any undue influence (such as those from big banks) and the resulting utilities should be regulated as a Systemically Important Financial Institution (SIFI).

Interestingly enough there seems to be a consensus that the FHFA should remain as is since it is reasonably well run under the direction of Mel Watt. However, the Financial Choice Act contains the expansion of accountability to this agency as well. How these differences will be addressed is yet to be seen.

Overall the last week or so seem to be heralding the resurgence of discussions designed to address many of the issues revolving around the mortgage market that for so long have been silent. This is welcome news to the industry. Now it is incumbent on us to support those changes we see as critical to the overall health of the industry. It finally appears that better days are ahead.

About The Author

Rebecca Walzak

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

The Balancing Act


A generation or two ago just about everyone owned a Craftsman tool purchased exclusively at retail behemoth, Sears, Roebuck and Company. The tools were rock solid and “guaranteed forever.” And if your first day of school was sometime in the 1970s, odds are you hit the playground during recess wearing some, at the time, very fashionable Toughskins. The pants were a conscious effort on the part of Sears to develop a garment that a kid couldn’t wreck. The pants were so “tough” that they were sold with a guarantee that kids would grow out of their Toughskins before the pants wore out. Tools “guaranteed forever” and clothes your kids outgrow before they wear out seem like a recipe for retail success. With that kind of value and commitment to customer satisfaction, why would consumers ever shop anywhere else?

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Recently, Sears, that anchor store for just about every American Mall built in the last few decades, sold the Craftsman brand in a desperate attempt to survive declining sales. Amazon is likely finishing them off after Walmart and Home Depot beat them up pretty good. It is also pretty damn near impossible to find a pair of Toughskins on any playground, but if you look you can find them in remarkably good condition on eBay.

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So what happened to Sears and what does it have to do with anything relating to mortgages?

If you think about it, Sears was the Amazon of the 20th century. In the 1890s, Richard Sears and Alvah Roebuck founded Sears, Roebuck and Company, publishing the first of its soon-to-be-famous catalogs. The company grew phenomenally by selling a range of merchandise at low prices to rural communities that had no other convenient access to retail outlets. Sound like Amazon in this century?

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But in the mid-1920s, new technology made Sears change course. Cars were making retail outlets in urban areas more accessible to consumers in the suburbs and rural communities. Sears tried to exploit this opportunity that technology was presenting, opening the first Sears retail store in Chicago in 1925. It was far more fun to drive to the store and get almost immediate satisfaction, than to flip through the hundreds of pages of a catalog, fill out a form, send a payment by mail and wait for the postman to deliver your goods what could be two or three weeks later. Sear’s retail store sales topped mail-order sales by the early 1930s. Over the next few decades the number of stores increased rapidly and Sears became America’s retailer.

Any kid that had a pair of Toughskins likely watched Dad scour the pages of the Sears catalog for that Craftsman tool before jumping in the station wagon and heading to the store. They, like their parents, their parent’s parents and maybe a generation before them didn’t realize they were living in a nexus, just waiting for technology to bring it all together. The paper catalog at the time was the best way to identify what was available at the Sears store. It weighed about seven pounds even with its micro-print, but its color images and the 800 phone number were the best technology had to offer. Sure, you could still mail order, but jumping in the car and driving to the local Sears store was the quickest means to an end. It met the consumers’ wants, needs and desires even if occasionally you did need to order and pick up in store a few days later.

But then, in this century, technology flipped things around and put it all together, changed some things and left other things pretty much the same. The Internet, electronic payment systems and second day free shipping made it more fun and convenient to shop online than to jump in the car. Catalog shopping was resurrected. With a swipe across a smart phone screen or the click of a mouse, all the material world has to offer is at your fingertips. It is so much easier to search and browse thousands of online catalog pages. Amazon exploited that technology and without the overhead of a brick and mortar retail store brought every convenience technology had to offer and lower prices to the market.

Lenders who have made a name offering value with a commitment to customer satisfaction are going to find consumers tempted by technology. Finding that balance, that Sears didn’t, will be critical to success. The obvious value an experienced loan originator brings to the transaction may not be enough to overcome conveniences technology has to offer.

About The Author

Kristopher Barros

Kristopher Barros is the Regulatory Audit Manager for Embrace Home Loans, a direct lender for Fannie Mae and Freddie Mac, approved by FHA and VA, and an issuer for Ginnie Mae.

Recap: 2016 Was A Solid Year


The U.S. housing recovery stumbled in December, a sign that rising borrowing costs and razor tight inventories were eroding homebuyer affordability after a year of solid growth.

Existing home sales, which represent the largest share of available housing stock, tumbled 2.8% in December to a seasonally adjusted annual rate of 5.49 million, the National Association of Realtors (NAR) reported January 24.

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Total existing home sales, which include single-family homes, townhouses and condominiums, finished 2016 at 5.45 million. That was well above the previous year’s 5.25-million rate and the highest since 2006.

Lawrence Yun, chief economist at NAR, attributed the solid annual growth to “exceptionally low mortgage rates” and steady job creation. While jobs and average incomes continue to rise, borrowing costs have surged since the presidential election, reaching multi-year highs at the end of December.

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Long-term mortgage rates rose last week for the first time this year, Freddie Mac recently reported. The average commitment rate on a 30-year fixed-rate mortgage rose 10 basis points to 4.19% in the week ended January 26. The average for a 15-year fixed-rate mortgage rose by 6 basis points to 3.40%. Rates on adjustable five-year mortgages slipped to 3.20% from 3.21%.

New home sales, a more volatile segment of the market, decreased 10.4% from November to a seasonally adjusted annual rate of 536,000, the Commerce Department said January 26. That was the slowest monthly increase since February and the biggest one-month fall since March 2015. Analysts in a median estimate expected sales to decline just 1% in December. New homes sales account for less than 10% of total transactions, and are subject to large monthly fluctuations.

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Despite the sharp drop in December, new home sales recorded their strongest annual increase since the subprime mortgage crisis, according to the National Association of Home Builders (NAHB).

Even though home sales declined in December, the underlying market fundamentals remain supportive of further growth in the sector. Total inventory for existing homes fell nearly 11% to 1.65 million in December. NAR said that was the lowest level since record-keeping began in 1999. It also suggests housing remains in strong demand and properties will continue to be snatched up at higher prices. This environment will prove challenging for first-time buyers, who are already being squeezed out of the market.

Groundbreaking for new homes surged more than expected in December, as a stronger economy lifted demand for rental housing. The increase coincided with separate data from the Labor Department showing unemployment benefits fell to nearly 43-year lows in January.

December housing starts surged 11.3% to a seasonally adjusted 1.23 million, the Commerce Department reported in January. Building permits, a bellwether for future construction plans, were little changed at a 1.21 million-unit pace.

A survey of homebuilder confidence by NAHB also pointed to steady market conditions at the start of 2017. Builder confidence in the market for new homes was little changed in January on optimism the new Republican administration will lower regulation and create a more business-friendly environment for small enterprises.

The Senate Banking, Housing and Urban Affairs Committee last week approved Ben Carson for housing secretary in a unanimous decision. The former Republican presidential candidate will lead the Department of Housing and Urban Development, which controls a budget of around $47 billion.

About The Author

Sam Bourgi

Sam Bourgi is a regular contributor for GoRion. He has more than seven years of progressive experience in economic analysis, market research, public policy and the financial markets. He has a broad expertise in the financial markets, including commodities, real estate the foreign exchange. As a published author in both peer reviewed and industry research, Sam has covered topics ranging from mortgage-backed securities to consumer spending and labor. Sam’s resume includes more than 40 government and industry publications, thousands of financial articles and hours of educational resources on personal finance and trading.

Gaining Perspective


Ten-X, an online real estate transaction marketplace, reported a slight decline in February existing home sales. According to the company’s nowcast, February sales will fall between seasonally adjusted annual rates of 5.34 – 5.69 million, with a targeted number of 5.51 million – down 3 percent from NAR’s reported January sales yet up 7 percent from a year ago.

“At some point, rising prices, higher interest rates, and limited inventory will begin to take their toll on home sales,” said Ten-X Executive Vice President Rick Sharga. “While online search activity remains strong, indicating healthy demand for homes, the relatively weak numbers in both new home sales and pending sales of existing homes suggest that buyers may be having trouble finding properties. But monthly housing numbers are notoriously volatile, so it’s too soon to say whether we’re seeing an inflection point, or the market is just taking a breath before coming back strongly in the spring.”

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Sharga has appeared on the CBS Evening News, NBC Nightly News, ABC World News, CNBC, Fox Business, Bloomberg, CNN and NPR. He has briefed government organizations such as the Federal Reserve and Senate Banking Committee and corporations like JPMorgan Chase, Citibank and Deutsche Bank.

The National Association of Realtors (NAR) recently reported that existing home sales saw strong growth in January, confirming the uptick the Ten-X Nowcast had previously indicated and even slightly exceeding those expectations. Existing home sales rose to a seasonally adjusted rate (SAAR) of 5.69 million units, up 3.3 percent from December and 3.8 percent from a year ago – its highest level since February 2007.

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The NAR also recently reported a 7.1 percent year-over-year increase in median existing home prices to $228,900 in January. This increase marked the 59th consecutive month of annual gains and also confirmed the nowcast prediction made in January. The February Ten-X Residential Real Estate Nowcast predicts that median existing-home sales will continue to make annual strides in February, falling between $220,056 – $243,220 with a target price point of $231,638 up 1.2 percent from January and up a substantial 9.9 percent from last year’s NAR figure.

The Ten-X Residential Real Estate Nowcast combines industry data, proprietary company transactional data and Google search activity to predict market trends as they are occurring – weeks before the findings of other benchmark studies are released. Building upon the groundbreaking work by Google Chief Economist Hal Varian, Ten-X’s nowcast model extends a traditional autoregressive-forecasting model to incorporate contemporaneous information that provides significantly enhanced accuracy.

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“The data shows that the refinance market has been slowing, so if rates go much higher it’ll come to a screeching halt,” Sharga noted. “In terms of fair lending, automating may be the answer. Technology is cold and blind so it can’t discriminate.

“However,” Sharga cautions, “there is a contingent that thinks technology is a panacea that will solve all of our problems and there’s another group that believe technology will never improve what I do because my way is the best way. We need better tools, technology and systems in place overall. Technology is not a fix-all, but anyone that thinks we won’t see more and more technology improve our market is misguided.”

Lenders underestimate the cost and time of implementation of new technology. They also underestimate the disruption technology with cost operations,” added Dr. Rick Roque. “Nonetheless, the Digital Mortgage is the only way to get more done with fewer resources.”

Roque is president and founder of MENLO, a firm that advises mortgage lenders on their M&A strategies. Moving forward he believes the mortgage industry will be more automated and less regulated. “I’ve met with several commissioners in a few states and they don’t see many changes in terms of regulatory enforcement. The role between the CFPB and the states is similar to the role of the FBI and the local police. They will come in with a chip on their shoulder and not share their data or practices. That dynamic won’t change. However, I do think this administration is determined to cut regulation and we are seeing lenders more focused on automation.”

But investing in technology isn’t always easy. “When you are evaluating technology you shouldn’t just look at that new and shiny object out there,” advised PCLender President Joe Langner. “You need flexibility. Lenders may invest in a new technology to solve this one problem, but that one thing that changed is going to change again. So, lenders need to look more broadly and you need to be able to invest in technology that can be modified on the fly if things change.”

Langner is a highly accomplished executive with 25+ years of senior level sales, marketing and general management experience, ranging from start-ups to $900-million business units. He has held executive and C-level positions with Sage, Ellie Mae and Dun & Bradstreet.

Moving forward, there will also be policy changes, warns Langner. “The government is buying all these securities. If that slows, which most expect that it will, that will have an impact. Also, changes to critical forms will cause some disruption this year.

“Any time you change major forms it gives lenders cause to look at their business and how they do things. At first compliance increases cost. Companies will add new checks and balances around what you need to do to comply because can be ambiguous at first. So, costs will go up and, with volume decreasing this year, you can expect lenders to do some layoffs,” he concluded.

If we put all this into perspective, as the title of this article suggests, we have a good idea of how things will proceed, generally speaking. “There are three areas where we’ve heard the president come down,” noted Sharga. “First, he has talked about getting rid of the mortgage deduction. Second, the general premise is that the regulatory environment will be relaxed, which should help the industry. Third, is the notion of unwinding the conservatorship of Fannie and Freddie. There has been talk of privatizing them. This is where we’re going as an industry. Moving forward, technology will play a vital role in how lenders adapt.”

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

8 Great Ways to Foil Small Business Stagnation


A U.S. Bureau of Labor Statistics report revealed nearly half of all small businesses fail within the first four years of their existence. While there are many proven causes, including owner incompetence, inexperience, fraud and neglect, one killer culprit often flies under the radar: stagnation. Indeed, losing momentum—with respect to revenues, market share and other mission critical indicators—is one sure fire sign that an entrepreneurial endeavor is in grave trouble.

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The good news is that a stagnated organization can take a number of proactive tactical measures—many fairly easily instituted—to turn the tide, spur change and, in doing so, kick the growth engine back into gear. Knowing she would have some insights, I connected with self-professed “Bosspreneur” Becky A. Davis of of MVPwork LLC. Not surprisingly, she offered a great number of strategies that entrepreneurs can employ right now to spark short-term progress.
The following are eight of her concepts that really resonated with me, also because they’re each highly effective within the framework of a long-term strategy for sustained growth.

Be a better “Bosspreneur.” An entrepreneur is defined as a person who takes a risk, start a business or enterprise to make money. Bosspreneurs do the same, but also have written and quantifiable targets, goals and actions. Not just focusing on staff and other external variables, they focus on self-improvement and believe they themselves can and should learn from anybody. Bosspreneurs accept responsibility. They are open to change and they want others to succeed. They consistently break down barriers. A Bosspreneur does not just own a business, they own their behavior.

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Promote ingenuity with immediate impacts. Ask employees, customers, partners and vendors this question: “What three things would you change right now that would impact the company this month or quarter?” No group is too “unimportant” or insignificant to offer valuable advice, opinions and perspective. Hold internal weekly brainstorming sessions with staffers for creating and collaborating on innovative ideas such as streamlining processes for speed and efficiency. Create a task force to document, analyze, prioritize and take tactical action on those ideas you feel will have an immediate impact on the business and then segue to those where the benefit will be realized longer term. When things stabilize, continue to do this once a month or quarter at the very least.

Be a stickler for staff accountability. As a business owner, it’s important to continually challenge your team and hold them accountable for activities resulting in measurable growth. Once you have set clear expectations and provided training and coaching, step back and give staffers the autonomy needed to perform the clearly articulated duties expected of them. Don’t micro-manage but do require regular progress reports so you can recalibrate as needed and remain proactive rather than reactive. If performance does not improve, it’s time for an accountability conversation. Have this conversation sooner rather than later, as the longer you take to expect improvement, the worse the situation will become for you and your team.

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Identify and resolve conflicts and unsavory politics. Conflicts, whether they are between personnel, staff and vendors, or even within the supply chain, can directly affect your company’s bottom line. Work to resolve those inevitable workplace conflicts so the company can come out even stronger on the other side. Do not forget, everyone is watching what you, as a leader, will do or, as importantly, not do. Taking a “wait and see” approach or hoping a situation will just pass is not a solution, but rather is more likely to foster a toxic work environment, often perpetuated by low performers, which can cause high performers to seek employment elsewhere.

Play all positions. Miami Heat coach Erik Spoelstra gave LeBron James the nickname of “1-through-5” for his ability to play and defend all five positions on the floor—an ability that earned James three NBA titles and four MVP awards. It is just as important for small business owners to be able to adjust and flex to their employee’s thinking styles to inspire an all-star performance from the team. Small business owners should be able to be similarly named “1 through-4” based on the four critical thinking styles: 1) the Analyzer only seeks the facts without the emotion 2) the Organizer – detail oriented, structured and procedures-oriented; 3) the Synthesizer – big picture people that are imaginative and excel at holistic in their thinking; and 4) the Harmonizer – The always empathetic, emotional and expressive person always seeking ways for people to get along. As the leader, to get the best productivity and create a high performance teams and third party relationships, you need to be able to play all four of these communicating positions based on how others naturally think rather than how you naturally think.

Even during hard times, give praise and rewards. When things are not going as well as expected, going out of your way to recognize and reward even small successes right now can re-invigorate key players and the team at large, fostering a renewed fighting spirit. Rewards don’t have to cost money. It could be an extended lunch hour, thank you email or word of encouragement. Employees get nervous when things are tough but if you increase your communication during those tough times, it will ease some of the tension. Always give credit where it’s due: create a formal monthly honors or rewards program that recognizes employees company-wide, at any level, for developing ideas and solutions that have a tangible beneficial impact on the bottom line.

Invest in top talent. According to research compiled from 3,800 small business leaders and conducted by, growing small businesses prioritize talent retention at a much higher rate than large enterprise. As a business owner, surround yourself with the smartest and best talent possible to propel your company to the next level. Invest the time to find those superstars—even in a part time consultative or contract capacity if you can’t afford to hire them on full time. The ideation, energy and optimism that comes from high-caliber staffers can be contagious and give the entire company a boost.

Pay it forward. As the business owner, take an active role in the community through pro bono work on boards and committees. Such activities often proffer new networking opportunities, enhance the image of the company and its figurehead, and drive good publicity—all of which can reinvigorate revenues. Sometimes when you pull yourself away from the business and serve someone else, it helps to clear your mind. Giving always has a way of coming back to you.

If your company is stuck in a rut, don’t wait another day to change course with the hope that somehow things will turn around without serious intervention. Taking immediate action and implementing growth acceleration strategies like those above will reinvigorate your business, strengthen your team and help ensure your business maintains forward momentum.

About The Author

Merilee Kern

Branding, business and entrepreneurship success pundit, Merilee Kern, MBA, is an influential media voice and lauded Communications Strategist. She also serves as the Executive Editor of “The Luxe List” through which she spotlights noteworthy brand endeavors. Merilee may be reached online at Follow her on Twitter here: and Facebook here:

The AI Era Is Here – Pt. 2


In the latest issue for Fortune, Erin Griffith examines the investment trends in AI (Artificial Intelligence) technology and poses the question: is AI an overhyped fad or a revolution? She writes, “There’s an easy way to tell when the hype around a technology trend has peaked. 1) Are the smartest venture capitalists complaining about valuations? 2) Are big tech companies snapping up start-ups so young they can barely be considered real businesses? 3) Are Fortune 500 executives talking about their [insert trend here] strategy? If the answer to any of these questions is yes, congratulations! You’ve identified a fad.”

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Of course, most revolutions look like fads in their early days—because they are. Distinguishing between those fads that will fade and those that will become the norm in the long term can be difficult, and as in all things, hindsight has a much higher success rate than foresight when it comes to identifying the winners and the losers. So what data might guide such an evaluation?

The research firm CB Insights recently reported that in 2016 there were 658 venture capital deals in the AI sector. In 2016, that amounted to $5 billion in startup funding deals, a significant increase from $589 million in 2012. International Data Corporation projects worldwide revenue from artificial intelligence and cognitive systems to be $47 billion in 2020, up from $8 billion in 2016.

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CB Insights selected 100 of the most promising artificial intelligence startups globally from a pool of 1,650 candidates based on factors like financing history, investor quality, and momentum. A look at the top 50 shows that AI is surging worldwide with 20% located outside the United States. They cover a wide range of market segments: core AI, FinTech, auto, health care, commerce, CRM, cyber-security, robotics, business intelligence, and text analysis and generation.

Interestingly, the fact that AI does not necessarily intersect with established business cases has not proven to be a hurdle to investment. “These are not businesses,” says John Somorjai, executive vice president of corporate development at Salesforce, which has acquired a handful of AI companies. “These [deals] are about technology and talent.”

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The development of artificial intelligence has inspired both fascination and dread.

In 1955, the term AI represented the concept of autonomous systems modeled on the structure of the human brain. At the same time, other researchers were tackling a different problem: finding patterns in what was then considered great volumes of data and making proper selections, or decisions, based on that data. In 1956 William Ross Ashby wrote in his Introduction to Cybernetics that “…what is commonly referred to as ‘intellectual power’ may be equivalent to ‘power of appropriate selection’.” This was not intended to as “artificial intelligence” in the way we typically understand it, and in fact was labeled as the inverse: IA, or Intelligence Augmentation. If this model sounds suspiciously familiar, it is because today’s AI systems are constructed on the IA paradigm. Our real-world applications, including language processing, machine learning, and human-computer interaction are based on IA—data pattern recognition and appropriate decision making—and as such, they augment our capacity to understand what is happening in the complex world around us. While the term “AI” became the label of choice for such technology, it is an ironic misnomer.

Let’s look at the “Why You Should Let Artificial Intelligence Creep Into Your Business” article in the March, 2017 issue of Inc magazine for some definitions:

How AI works: problem solving: Unlike traditional computing, which delivers precise solutions within defined parameters, AI, sometimes referred to as cognitive computing, teaches itself how to solve problems. “Instead of delivering specificity, AI-centric programming generates millions of solutions, evaluating each for efficacy and then choosing the most viable and optimal ones,” says Amir Husain, CEO and founder of SparkCognition.

What it does better: data diving: Manually finding your target customer, by searching and poring through income-level, interest-based, and geographical data, is labor-intensive and time-consuming. AI cuts to the chase. “For example, using a feed of three key pieces of information that the entrepreneur provides; a brief product description text, images and a price range; an AI system can zip through social media and other online outlets, looking for correlations between product and digital conversations,” says Husain. If you give it the green light, AI’s natural language processing technology then writes and sends a sales pitch, notes transmission times, and analyzes feedback. “You can almost hear an AI system going, Aha! I’ve cracked the code.” says Husain, adding that AI constantly optimizes itself by making slight changes to the message.

Where it works: practical apps: One key reason for AI’s upsurge is entrepreneurs’ free or inexpensive access to libraries such as IBM Watson, Goggle TensorFlow, and Microsoft Azure. These application programming interfaces (APIs) allow coders to build AI apps without starting from scratch. Husain expects to see a proliferation of AI-centric marketing, sales and other service startups focused on small and medium-size businesses.

Let’s look at some specific examples from the same article.

Call Centers: The biggest misconception about AI is that it’s robots with human faces sitting at remote desks. “AI is nothing more than an add-on technology, spice and flair, to an otherwise conventional system, such as a traditional travel-reservation site that, because of AI can now converse with a human,” says Bruce W. Porter, an AI researcher and computer science professor at the University of Texas, Austin. Porter emphasizes that future breakthroughs will not be 100 percent AI. “AI will likely provide a 10 percent product or service performance boost,” he says. That is, in fact, huge. Firms that fail to make the leap, he says, may fail to have customers.

Information Retrieval: Not all searches are as simple as typing a few keywords and having Google take over. Entrepreneurs often need more in-depth and complicated excavations for patent and trademark data, for example and that, in turn, involves an often-hefty legal budget to pay a highly-trained human to do. Porter foresees within five years many companies offering services to consumers who have no experience in AI or specific knowledge fields. They’ll be able to conduct their own AI based data retrieval. Count on industry disruption, he says, as this type of AI application will leapfrog current data-retrieval-service providers.

Contract Generation: Because it’s able to generate natural language, AI is an exceptional tool for helping entrepreneurs assemble contracts, as opposed to buying them off the shelf at, say LegalZoom. AI applications will converse with – by text and, ultimately, voice – and tease information out of humans that will become components of formal agreements, such as details about fee payments and product returns. Porter anticipates users will pay to access cloud-based AI computer systems to produce such documents. AI-centric startups, because they don’t require a human in the loop and won’t need to hire staffers, can offer their services at a very low cost, especially given an anticipated large volume of customers and business competition.

AI can displace humans, but it can’t replace them.

Leaders of every industry and institution are sprinting to become digital. Who will win? The answer is clear: It will be the companies and the products that make the best use of data. And the ones that make the best use of data will likely be the ones that use AI to gain efficiencies in data analysis and decision making.

About The Author

Roger Gudobba

Roger Gudobba is passionate about the importance of quality data and its role in improving the mortgage process. He is an industry thought leader and chief executive officer at PROGRESS in Lending Association. Roger has over 30 years of mortgage experience and an active participant in the Mortgage Industry Standards Maintenance Organization (MISMO) for 17 years. He was a Mortgage Banking Technology All-Star in 2005. He was the recipient of Mortgage Technology Magazine’s Steve Fraser Visionary Award in 2004 and the Lasting Impact Award in 2008. Roger can be reached at

1 Million Borrowers Regained Equity Last Year


CoreLogic released a new analysis showing that U.S. homeowners with mortgages (roughly 63 percent of all homeowners) saw their equity increase by a total of $783 billion in 2016, an increase of 11.7 percent. Additionally, just over 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8 percent of all mortgaged properties, or approximately 48 million homes.

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In Q4 2016, the total number of mortgaged residential properties with negative equity stood at 3.17 million, or 6.2 percent of all homes with a mortgage. This is a decrease of 2 percent quarter over quarter from 3.23 million homes, or 6.3 percent of all mortgaged properties, in Q3 2016 and a decrease of 25 percent year over year from 4.23 million homes, or 8.4 percent of all mortgaged properties, compared with Q4 2015.

TME0317-Chart One

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both.

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Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009.

TME0317-Chart Two

The national aggregate value of negative equity was approximately $283 billion at the end of Q4 2016, down quarter over quarter by approximately $700 million, or 0.3 percent, from $283.7 billion in Q3 2016; and down year over year by approximately $26 billion, or 8.4 percent, from $308.9 billion in Q4 2015.

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“Average home equity rose by $13,700 for U.S. homeowners during 2016,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The equity build-up has been supported by home-price growth and paydown of principal. The CoreLogic Home Price Index for the U.S. rose 6.3 percent over the year ending December 2016. Further, about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”

“Home equity gains were strongest in faster-appreciating and higher-priced home markets,” said Frank Martell, president and CEO of CoreLogic. “The states with the largest home-price appreciation last year, according to the CoreLogic Home Price Index, were Washington and Oregon at 10.2 percent and 10.3 percent, respectively, with average homeowner equity gains of $31,000 and $27,000, respectively. This is double the pace for the U.S. as a whole. And while statewide home-price appreciation was slower in California at 5.8 percent, the high price of housing there led to California homeowners gaining an average of $26,000 in home equity wealth last year.”

About The Author

2017 Could Be Make Or Break


This is shaping up to be an interesting year in American real estate. There are a lot of shifting dynamics, yet confidence appears to be up, despite the fact many are still feeling the hangover of the 2008 crises. It could be a make or break year for millions.

Behind the Headlines

In the wake of the recent presidential election the media appears to be reporting a lot of optimism in various economic and financial sectors. The Dow Jones has been pushing new highs, and real estate values seem to have experienced solid growth in 2016.

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However, things are still not back to where they were before the housing and credit crisis. According to Darren Blomquist of ATTOM Data via the DistressPro Professional Podcast, distressed homeowners are still being impacted at a rate of almost double the norm. This is particularly true in the case of rising REOs in MD, DE, and NY. According to Zillow Fort Lauderdale homes are still trading for an average of $62,000 less in 2007. That’s despite 6 years of positive growth, and projections that recently hot markets like Miami and Fort Lauderdale are set to cool in 2017. In fact, Zillow has dubbed many markets like this, and even Dallas, TX as ‘Buyers’ Markets’ this year.

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What we have is an ongoing stream of foreclosures, REOs, and auction sales. When at the same time property prices may already be preparing to soften. We’ll have to wait and see if the new confidence and media spin can turn things around, and extend this run.

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Struggling Sellers & Clouds on the Horizon

Some mortgage borrowers have gotten help to inject some sustainability into their housing situation. Others have been lured into unsustainable loan modifications or re-capitalization agreements. Those that haven’t acted could face foreclosure this year, and limited options in finding help.

There is help out there, but evolving trends are going to make it harder for struggling owners to solve their debt burden. Recent pools of non-performing loans being sold by GSEs have moved up from trading at 40 or 50 cents on the dollar to 70 cents or more on the dollar. That leaves new mortgage note holders far less negotiation room for workouts with borrowers.

In markets like Miami, Dallas, and New York where there has been a massive new construction run, sellers are now facing stiff competition from brand new homes and condos for sale. Market statistics from the Naples Area Board of Realtors shows several months of declining pending sales and closed sales, while marketing time has increased, and housing inventory has climbed 40% year-over-year. A series of expected interest rate hikes may also take a big chunk out of the potential home buyer pool for 2017 and beyond.


While there is a lot to be optimistic about in 2017, struggling property owners are still faced with the fact that lenders are becoming less motivated and able to work things out with them. At the same time the prospects of selling a home are growing dimmer. Time is of the essence for obtaining help and finding relief while there are still options available.

About The Author

Kaya Wittenburg

Kaya Wittenburg is the head of Florida based Sky Five Properties. He has supervised the sale of over $4 billion dollars in real estate assets, has led some of the fastest growing companies in America, and was selected as judge for the Rothschild Business Planning Competition at the University of Miami.