Hope you subscribe to my blog as well and leave a few comments here and there! Also would appreciate it if you check out some of my products I created and maybe you could promote them on your blog to make us both some money! Check out my blog too..

All the best,
Dino Vedo

PS: Like my Facebook fan page and follow me on Twitter and I’ll do the same for you!

Rick has an excellent point: don’t write too much. Blogs are not articles; they’re opinions that should be succinct and hopefully to the point. You don’t have to produce deep dive thought leadership pieces. It’s quite alright to briefly comment on news stories. What’s in the news is generally news. Your opinion should get readers thinking, not overwhelm them with long winded articles.

I don’t think it will ever be totally 100% lights out, but I certainly see 90%+. In my work, developing automated systems and business rule systems, I’ve built mortgage underwriting and credit card underwritng and P&C insurance underwriting that can automate int he high 90 percent range. Credit policy can be managed by business users, the bureau can be pulled and processed in electronic form, analytics executed and passed to the business rules for adjudication. Big pieces of functionality exist today. I don’t know as much about the other documents such as verifying someone’s W-2, but I’d be surprised if there wasn’t some technology available to at least help.

To comment on Becky Walzak’s post, I do see some progress on the risk management front for the origination process but more as decision support than automation. Even with automation, a lender can make poor decisions about their credit policy and consequently have a poor result; it’s a combined effort.

For example, Adobe provides functionality that allows form fields to be changed and digital signatures to be added, while keeping the rest of the document safe from alteration, but I’m not aware of any PDF tools that will mark changes made to an unlocked PDF.

If you are saying that we should just trust those who handle the documents that our system generates, I’m not sure that I can swallow the legal risks of doing so.

Good luck, Uma. Can’t wait to see what you do with it!

Rick.

I will definitely be sure in saving your website and for sure definitely check back periodically.

But for the back end closing and post-closing? It has less to do with the mortgage banker wishes or desires – because the advancement of the eMortgage will be led by the warehouse lender. You don’t close loans that you cannot fund. It doesn’t matter what the market says, it matters what their banker’s banker says. I don’t foresee any changes until average warehouse lenders are prepared to morph into a variable/transaction based revenue model from the current interest income model.

And from our experience, today a substantive hurdle for the eMortgage is the borrower. In closing loans across the country with some of the most advanced eMortgage technology and support available, we still have to remember the borrower gets a vote. While some are fine with it, many are not comfortable with it – AT ALL. All the best intentions won’t carry much weight when faced with a elderly borrower who adamantly refuses to close their loan on your laptop.

Thank you!

Uma

I am a professional who has been building and operating standards based computer systems in the mortgage industry. Many hardworking professionals in the mortgage industry have volunteered countless hours to create industry strength standards through MISMO/PRIA/MBA and MERS. It would be very advantageous for SEC, on adoption and efficieny front, to utilize all the hardwork that MISMO members have already invested in creating MISMO standards.

There is a significant body of knowledge behind MISMO standards. Leading industry experts, many commercial organizations, GSEs, industry consortiums, conferences, trade sgows, computer system builders, service providers and numerous others already use MISMO standards and contribute to its continued growth and sucess on a daily basis. SEC exploring options other than current MISMO standards, will be both a waste of SEC’s time and also make it a huge burden for those wanting to use SEC’s new standards. I request SEC to do the right thing- utilize MISMO standards and help an industry in times of trouble, as opposed to adding to its difficulties through additional standards.

Sincerely
Ragu Nathan
President, RAAG-LLC

If we really want to change business processes and automate for the better, we have to address the fears that are a major roadblock on the journey.

I hope the SEC takes a closer look at MISMO, the systems built around it, and chooses it as the go forward standard.

Since the time Solomon Brothers and Fannie Mae developed the first MBS, the “quality” of the product was based on performance. Performance was defined as lack of default and/or lack of pre-payment because of long held traditions that borrowers will always pay their mortgage first. How wrong we were! We need to find a way to meet the new secondary market demands. These are what I think they should be:
1. Loan transparency – Every investor should be able to select any loan from any pool and get a synopsis of not only the basic amount, rate, occupancy, purpose,etc, but an analysis of variances in the underwriting process, the data integrity and the overall performance risk based on these issues. There should be no secrets surrounding the degree to which a lender followed his own rules.
2. Redefine Risk-based Pricing – The foundation of risk-based pricing needs to change- from static indicators such as documentation and credit score to facets that the lender controls. The real secondary risk is not what the borrower’s capacity is but how well the lender evaluated that capacity and the resulting decision. In other words the lender’s risk needs to be evaluated. Would you buy a car just because you knew that it had four doors without knowing who the manufacturer was? Probably not, but that’s what we have been asking investors to do. They need to know the “brand” of the loans and have confidence in that brand.
3.Expand risk-based pricing – Rather than saying this has “risk” and this does not, we need to say what is the real risk level and how much will you pay for it. So if the lender wants to do a No-Doc loan for a borrower in a declining market where the quality review found the risk of performance to be very low, why not let him do it IF he gets paid specifically for that risk. In this case it may be pennies on the dollar. We MUST have a standardized way to tell investors what this risk is.
4. Reliability – Give investors a sense of reliability about lenders and their products. The manufacturing industry knows this; take a look at how often you purchase the same brand of product because “it does a good job”. In other words it does what you expect it to. Having confidence in the product doing “what you want it to” gives it much greater value. Achieving this means a standardized way to measure and document the level of lender reliability.
The reality is that the secondary market no longer trusts anything or anyone. To get it back we have to give them confidence in the lenders, not just the loans. And to do that we need a standardized measurement that quantifies the risk of the lender failing to do what they are suppose to do. Lenders need to be rated and risk-ranked so investors will be confident that they are getting product that does what they want it to do.
5.Repurchase risk – It must also be measured and standardized. Currently it is an antagonistic process that pits lenders against investors. There is no consistent rhyme or reason as to why a loan has to be repurchased, just that some issue or another was discovered in the file. If we want investors to have confidence we need to be able to quantify what caused the loan to default and what, if any, process failure caused it. If the lender agreed to approve only loans with a verified income that resulted in a 45% contribution to debt payment and it was actually approved at 57% AND this is what caused the default, then yes, it has to be repurchased. However, if in the same scenario, the verified income resulted in a 45.7% ratio and the borrower had a significant reduction in income, an analysis would show that this variance had nothing to do with the default. There should be no repurchase. We have to have a standardized way to determine if any variance from guidelines found in a review actually had an impact on performance. If it does not, then their should be no repurchase. After all, this is the risk the investor is taking in hopes of a return.
6. Automate QC and Due Diligence. We have technology to assist in every part of the process except for the measurement of lender risk. Instead what we have is an antiquated labor-intensive process that is subjective, slow and ultimately meaningless. It MUST become an automated streamlined technological process that results in a standardized score for every loan. This score can then become the benchmark of “good or bad”, “high risk or low risk” loans. This is what will drive pricing which will ultimately drive lenders to produce better quality loans to get better pricing and draw more investors.

Want a robust secondary market? STANDARDIZED MEASUREMENT and REWARD have proven to do just that. We just need to let go of “tradition” and use the loan and lender scores available today.

Cary Burch

As a business owner, rarely my employees find better or cost saving efficiency solutions. I think it is because it is not their money they are spending, they are doing what they are told, and I think if they try to think out of the box they feel they create more work or may take away from their turf. It is usually when I have to get involved in a process because of a issue or problem that better efficient means are created.

I think this is why the industry is slow in implementing efficient solutions. I also tell folks my idea is not always the best idea, it is just an idea and there are smart folks out there that probably have a better one.

Leaders should be open to change and new ideas. If it were your money would you do that way?

Cary Burch