**By Tony Garritano**

***As the industry evolves, so must we. We have an obligation to provide new and different offerings to keep you in the know. To this end, PROGRESS in Lending Association has entered into a partnership to help all of our followers get real-time market. We think it’s important and we’re happy to bring this new service straight to you. Here’s the details:

****PROGRESS in Lending has partnered with LoanSifter to bring you real-time rate information as provided through AMRi. What’s AMRi? The LoanSifter Available Mortgage Rate Index or AMRi is the mortgage industry’s first complete, real-time mortgage rate index that is based on same-day rates and the only index that provides a realistic idea of what borrowers typically pay for a loan. Three main characteristics set LoanSifter AMRi apart.

****First, it provides the most accurate depiction of current and historical mortgage rates available on the market. It is the only index based on same-day rates. Rather than using past sources of information, the LoanSifter AMRi’s indices are created by leveraging real-time data from 25 wholesale and correspondent lenders. Second, the LoanSifter AMRi was created in partnership with the Federal Reserve Bank of Boston, one of twelve district Reserve Banks in the Federal Reserve System. Third, use of the LoanSifter AMRi is completely free of charge.

****The LoanSifter AMRi lists all relevant rate information all on a single page. There are two indices presented: the prime rate Index (for 30-year fixed rate conventional mortgages), and the FHA rate index, which covers mortgages for “nonprime” borrower scenarios. Each index is updated daily to demonstrate the most current calculated rate a borrower would receive from the average lender, based on the system’s given par scenario.

****Why is this significant? LoanSifter AMRi provides real value to so many of the industry’s constituents– lenders, borrowers, researchers, journalists and others – its significance is particularly broad. But most importantly, it personifies the definition of innovation – the creation of better and more effective products, processes and ideas. The LoanSifter AMRi provides an alternative, eliminating the industry’s need to rely on backward-looking data collection methods that rely on reported mortgage rate information, and replaces it with actual rate quotes. It replaces a quasi-information source that does not provide a true comparison of typical points from week to week with a real-time accurate snapshot that allows for variances and adjustments.

****Today you can get real-time AMRi data in the Data Center Section on our website in the right column. And starting next week we will also be providing AMRi data in or daily electronic newsletter. We see this as a great value add for our followers and we’re grateful to LoanSifter for sharing this innovative new service with us.

**LOS Sees Refi Upswing**

***As vendors look to provide more value, they are realizing the importance of market visibility. So, what are they doing? They are using their data to create industry reports. Interthinx has been very successful in publishing its fraud report, for example. Now, origination vendor Ellie Mae has released its Origination Insight Report for April 2012. The report draws its data and insights from a sampling of the volume of loan applications that flow through Ellie Mae’s Encompass360 mortgage management software and Ellie Mae Network. Here’s what the report found:

****“As we move into the spring and summer buying season, there was a significant pick up in the percentage of purchase loans: 44% in April up from 39% in March,” said Jonathan Corr, chief operating officer of Ellie Mae. “This is the highest level of purchase loans activity in the last nine months.”

****To get a meaningful view of lender “pull-through”, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the January applications) to calculate a closing rate for April. Ellie Mae found that 48.1% of all applications closed in April compared to 46.9% in March (see full report).

****“In April, the average loan-to-value (LTV) for closed loans hit 80%, the highest we have seen since we started tracking in August 2011,” Corr added. “The increase was driven by an easing of LTVs on conventional refinances (the average LTV was 69% in April compared with 65% in March) and what we believe to be the first surge in Home Affordable Refinance Program (HARP) 2.0 activity from correspondent lenders.

****“Last month closed refinances with LTVs of 95%-plus, nearly doubled to 7.1% compared to 3.6% in March. This has been slowly increasing since the HARP 2.0 announcement in October 2011, but correspondent lenders have only recently been able to run these loans through Desktop Underwriter and Loan Prospector.”

****However, the spike in activity has had some negative consequences. “Recently, the Wall Street Journal and other media outlets have been reporting that the nation’s largest retail lenders are now quoting long timelines for refinances—in some cases as long as 60 to 90 days,” said Corr. “While the average refinance going through our platform took five days longer in April than in March, it still only took 47 days. So, it appears that small and mid-sized lenders and community banks on our platform are providing faster decisions than the retail channels of some mega-lenders.”

**By Tony Garritano**

***The past two weeks have seen a whirlwind of activity on the loan origination side of the business. We broke the news that Canadian firm D+H acquired LOS Avista and yesterday we broke the news that LOS Mortgage Builder acquired servicing mainstay GCC. It’s been a lot to take in. Well, today there’s more news to digest. I told you last week that I would tell you about some exclusive news from Genpact when it was ready. Well, it’s ready. Here’s the scoop:

****As a recap, we broke the news last week that Genpact Limited, a business process and technology management provider, released virtual correspondent and private-label origination applications for its Quantum Mortgage Operating System (MOS). The applications are leveraged with Genpact’s Mortgage Business Process as a Service offering (BPaaS), which combines the technology with Genpact’s business process services, data analytics and mortgage domain expertise.

****The virtual correspondent and private label applications combine Quantum MOS’ data-centric loan automation platform with Genpact Mortgage Services’ BPaaS offering to increase effectiveness and reduce the loan cycle time by as much as 30%. The applications can be set up in either a delegated or non-delegated model, enabling users to customize the workflow to best suit the needs of each lender.

****Today Genpact is launching a new LOS. Why does the industry need another LOS? This LOS takes a new approach to mortgage lending, and let’s face it, a new approach is need. This solution takes a page from Apple and iTunes. How? It offers what can be best described as apps. There is an origination, processing, underwriting, closing, shipping and secondary app. This gives the lender the ability to use all the apps and implement a new end-to-end LOS or just implement certain apps that solve isolated issues. This approach also enables the lender to avoid a long, expensive, implementation of a new system whereby they have to rip out their old system and put in a new one. Because of this app approach, over time the lender can migrate to a new LOS by implementing one app at a time on top of its existing system until the full LOS is implemented. Once the full LOS is implemented you just turn off the old system instead of ripping it out and undergoing a period of painful transition.

****However, in my mind, the biggest differentiator is the core philosophy behind everything Genpact is trying to do. I’ve been talking about things like e-mortgages for years. What Genpact does with this new LOS is make larger concepts like the e-mortgage attainable. As investors and regulators look for more transparency and data over forms, this new LOS is ready to meet that challenge because it was built with a data-centric approach to mortgage lending from the ground up. Once an application is entered into a system, that data should be instantaneously available at every step of the loan process. For example, underwriters should be able to evaluate the AU results and apply risk decisions based on trusted data, not error-prone forms. In my mind, that’s what makes this new system unique. Going forward, I’ll keep you updated on its progress and industry acceptance.

**LenderMobile Enhances Its Offering**

***PROGRESS in Lending has reported on a few vendors getting their feet wet in the mobile space. One of those vendors is LenderMobile, a provider of mobile mortgage loan applications for iPad computers. Now we have learned that the vendor has added two new features to its LenderMobile+ flagship application in response to users’ requests. Here’s the full details on how this vendor hopes to take this space mobile:

****The new imaging feature lets loan originators and borrowers take photos of documents with the iPad camera and add the images to loan files through cloud computing technology. Plus, the new loan notes feature lets users add notes to a loan file directly from their iPad.

****On the iPad screen, loan originators can click the new photo button of the LenderMobile+ app to take pictures of documents for a loan file, such as W-2 forms, tax returns, paystubs and drivers licenses, and do so from anywhere, from a borrower’s home to the local coffee house. Or users can choose from the iPad app’s library of photos to add to a loan file. This feature gives users the option of cancelling photos, so they can re-take photos of documents if not satisfied with the original ones.

****Once added to a loan file on an iPad, the document photos in the LenderMobile+ app are then validated and processed in the LenderMobile computing cloud and can be sent to a lender’s LOS. With the app’s photo feature there is no need to scan, email or fax documents.

****The new LenderMobile+ loan notes feature enables loan originators to add notes to individual loan files. A loan notes form is available on the screen for each loan file where users can type and save their notes in a free form text.

****“We’re making our iPad app more useful to users when originating mortgages,” said Iavor Boyanov, chief technology officer and co-founder of LenderMobile. “The new document photo feature is great for loan agents on the go who need copies of borrower loan information quickly to avoid any processing delays. And more and more loan agents requested the ability to write and add notes for particular loan files from their iPads, and we delivered.”

****The LenderMobile+ iPad app uses cloud computing technology to bring mortgage origination capabilities to the screen of any iPad user who has downloaded the mobile application. Loan originators using the app can complete all the required mortgage application forms, save the loan data and securely submit them to their LOS. Borrowers can electronically sign the loan application directly on the iPad. Loan agents also can order vendor services from their iPads, such as credit reports and review them in real-time with borrowers.

****LenderMobile+ can generate individual loan files, enabling users to add documents and other data to the file as well as deleting documents that are no longer necessary. Uploaded mortgage forms are automatically checked to see if they have been completed and electronically signed. The app handles all the necessary file generation for lenders, such as files for Fannie Mae’s DU 3.2. Data files can be written based on DU 3.2 specifications for a new file.

****The LenderMobile+ application can be downloaded at no charge from the online Apple App store. A monthly subscription is required for loan originators using the LenderMobile+ app to order services from third-party vendors and submit mortgage loan documents to their LOS. The subscription is available on www.LenderMobile.com

**By Tony Garritano**

***The loan origination space is heating up for sure. We’ve seen some noted acquisitions and today I’ve been given the scoop on another such deal. Let’s understand, LOS companies have to add value. In this case an LOS is not getting acquired, but rather is doing the acquiring to be able to offer its customers that much more value. I told you last week that I would bring you some exclusive news from Mortgage Builder when it was good to go. Today Mortgage Builder has acquired an industry mainstay. Here’s the scoop:

****Mortgage Builder has entered into an agreement to acquire GCC Servicing Systems, a leading loan servicing software provider that shares 35 years of history with its new owner. A sale price was not disclosed. GCC is the creator of G/Serv, a mortgage servicing software popular with mid-tier lenders, community banks, credit unions and mortgage companies, a market sector also well-served by Mortgage Builder. The teaming of the two technologies comes at a time when many lenders are retaining servicing rights and responsibilities rather than using subservicers and selling loans on a servicing released basis.

****“More lenders need servicing software now than at any time in recent history,” says Keven Smith, Mortgage Builder’s CEO and president. “With the acquisition of GCC, Mortgage Builder now offers a complete lending system that empowers lenders to control all aspects of the process,” he notes. “And with their common DNA, the platforms work extremely well together, making it far simpler for lenders to make smooth transitions into loan servicing.” The GCC staff will join Mortgage Builder and GCC will operate as a separate division with Jeff Augenstein, vice president of GCC, responsible for the day-to-day operations.

****GCC Servicing Systems was founded in 1977 as Glenn Computer Corporation by Glenn Liebowitz in Southfield, Michigan as a mortgage servicing, loan origination, and accounting service bureau. The loan origination product was spun off in 1998 to become Mortgage Builder Software. G/Serv brings Mortgage Builder a comprehensive loan servicing platform that automates all servicing administration functions, along with default management and full reporting capabilities. Like Mortgage Builder, G/Serv has evolved greatly since it was first released, and is now designed for Software as a Service (SaaS) delivery for fast, cost-effective implementation, and is hosted in a SAS-70 Type II/ SSAE-16 Type II compliant data center.

****“This acquisition puts Mortgage Builder into a unique class of technology providers,” says Kelli Himebaugh, corporate vice president of Mortgage Builder. “As a nimble, independent company, we are well accustomed to working with regional and mid-tier lenders” she says. “We can now bring our highly personalized approach to lenders choosing to become servicers to maximize returns and improve borrower service levels,” she says. “A new era is dawning for the mortgage industry and with the addition of GCC, we are able to provide a full range of exceptional technologies for America’s lenders.”

**By David Lykken**

***Harnessing social media tools can help you connect with potential customers in new ways as well as increase your mortgage company’s brand recognition.  Social Media websites have gone well beyond being a passing fad and have become “mainstream” strategic marketing and communication tools.  If you are not yet a believer in the benefits of social media for your business, consider the following two dozen facts:

****1. As of last year, Gen Y will outnumber Baby Boomers and 96% of them have joined a social network

****2. Social Media has overtaken porn as the #1 activity on the Web

****3. 1 out of 8 couples married in the U.S. last year met via social media

****4. Years to reach 50 millions Users: Radio (38 Years), TV (13 Years), Internet (4 Years), iPod (3 Years)…Facebook added 100 million users in less than 9 months…iPhone applications hit 1 billion in 9 months.

****5. If Facebook were a country it would be the world’s 4th largest between the United States and Indonesia (note that Facebook is now creeping up—recently announced 300 million users)

****6. A recent U.S. Department of Education study revealed that on average, online students out performed those receiving face-to-face instruction

****7. 1 in 6 higher education students are enrolled in online curriculum

****8. The percentage of companies using LinkedIn as a primary tool to find employees is 80%

****9. The fastest growing segment on Facebook is 55-65 year-old females

****10. Generation Y and Z consider e-mail passé… therefore an increasing number of colleges have stopped distributing e-mail addresses to incoming freshmen

****11. The #2 largest search engine in the world is YouTube

****12. Wikipedia has over 13 million articles…some studies show it’s more accurate than Encyclopedia Britannica…78% of these articles are non-English

****13. There are over 200,000,000 Blogs

****14. Because of the speed in which social media enables communication, word of mouth now becomes world of mouth… consider the recent uprising in Egypt

****15. 34% of bloggers post opinions about products & brands

****16. 78% of consumers trust peer recommendations

****17. Only 14% trust advertisements

****18. Only 18% of traditional TV campaigns generate a positive ROI

****19. 90% of people that can TiVo ads do

****20. 24 of the 25 largest newspapers are experiencing record declines in circulation because we no longer search for the news, the news finds us

****21. In the near future we will no longer search for products and services they will find us via social media

****22. More than 1.5 million pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared on Facebook…daily.

****23. Successful companies in social media act put listening (via social media) first, selling second

****24. Successful companies in social media act more like aggregators and content providers than traditional advertisers

****The three social media sites I recommend that you consider using are LinkedIn, Facebook and Twitter. Whether you are an individual working at a technology company or as a loan originator or with a small mortgage company or a large financial institution, my recommendation is for you to start creating “your community.” Please call me if you want help developing an effective social media strategy for yourself and/or your company.

**Partnership Makes Property Visibility Easier**

***One leg of making a good decision about a loan is knowing everything there is to know about the property. So, how do you do that? It just got easier. CoreLogic, a provider of information, analytics and business services, and California Regional MLS (CRMLS), the nation’s largest multiple listing service (MLS) provider, today announced that CRMLS has joined Partner InfoNet by CoreLogic. The companies also announced that CRMLS has agreed to a multi-year extension of its Matrix MLS system contract.

****Launched in June 2010, Partner InfoNet is an innovative revenue-sharing program in which MLSs license their listing data to CoreLogic for use in risk management products for mortgage lenders, servicers, and capital markets (but not consumer outlets). With the addition of CRMLS, Partner InfoNet now encompasses nearly 1.1 million active listings and more than 450,000 real estate professionals from 78 MLSs.

****Matrix is an enterprise-class MLS system that provides real estate brokers and agents with a flexible, high-performance platform for managing real estate listings. 16 MLSs serving more than 163,000 real estate professionals currently use Matrix, and six more installations are scheduled for this year. In total, CoreLogic serves approximately 550,000 real estate professionals with its MLS systems—more than half the North American market.

****“Through our local member associations, we strive to provide the most dependable, convenient and affordable listing technology services available,” said Art Carter, CEO of CRMLS. “Matrix has proven to be an extremely fast and reliable MLS system that meets the needs of our progressive subscribers by supporting virtually all computing platforms and devices. Partner InfoNet supports our goal of keeping costs down for our members by simply and securely leveraging the value of our listing data.”

**By Tony Garritano**

***As the mortgage industry and economy begin to recover, lenders are increasingly reevaluating their technology options. According to a QuestSoft survey of 461 lenders nationwide, 18.7 percent of mortgage lenders are considering changing their loan origination software (LOS) in the next 12 months. This is the highest percentage looking to switch in the six years QuestSoft has been conducting its annual survey. Here’s the scoop:

****When QuestSoft, a leading provider of mortgage compliance software, began conducting their annual compliance and technology survey in 2008, the number of lenders considering replacing their LOS remained consistently around ten percent each year (22 of 207 lenders in the survey’s first year). However, last year, the percentage of lenders jumped to 17.75 percent, with a new high of 18.7 percent looking to change this year.

****“One of the factors in seeing more LOS changes is the reduced expense of implementation and conversion offered by hosted software companies,” said Leonard Ryan, president and founder of QuestSoft. “Another factor may be the result of acquisitions. As LOS vendors have merged, acquired customers may be using the change as an opportunity to evaluate their platforms.”

****Ryan added that many lenders also said they place a high priority on LOS providers that have comprehensive compliance functionality. QuestSoft currently integrates with more than 40 leading LOS platforms, and the LOS systems integrated with QuestSoft’s flagship product, Compliance EAGLE, are able to provide a simple interface that automates the evaluation of a loan file against a suite of more than 300 federal and state compliance regulations representing more than 10,000 pages of standards.

*Research Reveals Compliance Woes**

***The Consumer Financial Protection Bureau has made designing a new disclosure form that combines the Truth in Lending Disclosure (TIL) and Good Faith Estimate (GFE) a top priority in 2012. The pending reform also ranks as lenders’ greatest compliance concern according to QuestSoft’s fourth annual compliance survey. What else are lenders concerned about? Here’s the full details:

****The combined TILA/GFE disclosure was cited by 48 percent of lenders as a high concern, with an additional 33 percent citing the reform as at least of medium concern. The survey, which polled 426 lenders on their level of anxiety for regulatory changes, also found fair lending exams, continued refunds and losses from the Real Estate Settlement Procedures Act (RESPA) fee tolerances (40 percent highest concern) and Dodd-Frank rule making (42 percent highest concern) as top issues.

****“The CFPB has been testing new disclosure forms for the past year, and we are expecting the final rule to be announced within weeks,” said Leonard Ryan, president of QuestSoft. “Factor in the CFPB’s position that consumers who do not receive proper disclosure should have the right to walk away from a loan, and it is no surprise that disclosure compliance is the top concern.”

****Ryan added that the overwhelming number of Dodd-Frank laws remains a high concern due to the uncertainty of what specific rules will be implemented, and their enforcement deadlines. RESPA Fee Tolerances were in the top three concerns for the second year in a row, polling as the second highest area of concern for 2011.

****“Dodd-Frank has listed seven new major reforms as its mandated priorities for 2012, but there is still uncertainty. These seven reforms are all required to have the final rule on or before January 21, 2013, and yet what exactly they will entail is unknown,” Ryan said. “This uncertainty naturally causes stress among lenders. Additionally, there is concern that the rush to comply with the law will result in final rules with unintended consequences.”

**By Roger Gudobba**

***Personally I have been working with computers in one form or another for over 50 years. When I look back over the years I am amazed at the progress that has occurred in the computer industry but also disappointed because I don’t believe we have yet utilized all the tools at our disposal to maximize the opportunities that technology makes possible for our industry.

****Computers, in the broadest terms, consist of hardware and software. Hardware is the physical component and software is the instructions that make the hardware work. The job of the hardware is to collect data (through user input with the keyboard, mouse, or scanner), store data (on hard drives and servers), and output data (through monitor display and printers). The purpose of software is to provide an interface between users and hardware so that human will can be exercised in managing the data: cataloging it, defining its logical relationships, and using it appropriately in decisional processes. Hardware capabilities have grown exponentially over the years. Have software capabilities kept pace?

****Computer programs have plenty of capacity when we consider the metrics of speed and memory, but their capacity for logical data use is limited to the intellectual mechanisms that software engineers understand well enough to program into their software code.

****What does this have to do with artificial intelligence?

****Artificial intelligence, or AI, is the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence.

****The field was founded on the claim that a central property of humans, intelligence, can be so precisely described that it can be simulated by a machine.[i] Aspects of human intelligence of interest in the field of AI include speech recognition, deductive reasoning, inference, and the ability to learn from experience.

****Arthur R. Jensen, a leading researcher in human intelligence, suggests “as a heuristic hypothesis” that all normal humans have the same intellectual mechanisms and that differences in individual intelligence are related to “quantitative biochemical and physiological conditions”. I see these varying differences as differences in speed, short-term memory, and the ability to form accurate and retrievable long-term memories.

****Whenever people do better than computers on some task or computers use excessive computation to do as well as people, we may conclude that the program designers lacked understanding of the human intellectual mechanisms required to do the task efficiently.

****An extension of AI is in the development of expert systems. An expert system is software designed to make decisions or solve problems within a limited domain, like finance, using the knowledge and analytical rules set forth for its operation by its engineers. Automated Underwriting Systems (AUS) and credit score (FICO) are considered examples of such expert systems in the mortgage industry.

****Heuristic classification is another example of AI at work, allowing users to classify an unknown by matching its features against the features of those things that are known. Let’s say we ask an expert system for advice about whether to accept a proposed credit card purchase. The expert system can classify the decision to accept the credit purchase against what is known, such as the buyer’s record of credit card payment, the value of the item he is buying, and the establishment from which he is buying it, including the rate of previous credit card frauds at the location.

****Artificial intelligence was the genesis of creative computer programming. Let’s talk more about this next time.

**A New Report Quantified LOS ROI**

****Lenders never seem to be happy with their loan origination systems. And they’re right to be upset. Many LOS systems on the market are based on old technology and hinder the lender from truly advancing. Lenders become hostages to their LOS. Nonetheless, lenders need an LOS. So, how do you quantify the true return on investment? Origination vendor Blueberry Systems LLC released the independent findings of a MarketWise Advisors’ detailed ROI Analysis of the implementation of its RELAY loan origination system at Plano, TX based Starkey Mortgage. Here’s what the report found:

****“We are excited about the direct and measurable advantages that RELAY has already given us. We’re looking forward to the increased returns as time goes on,” said Starkey CIO Bill Burke. “But just as important to us has been the high level of service and the partnership they have developed with us. They are sincerely invested in our success.”

****Starkey Mortgage implemented RELAY in January 2012 and MarketWise Advisors closely analyzed the subsequent impact of the system on the lender’s loan origination operations. Based on the system’s performance, it found that in a typical implementation of RELAY, a mid-tier mortgage lender with $500M-$5B in annual origination would ultimately save nine hours of work, or approximately $287.75 per loan. Starkey Mortgage is well on the way towards achieving this objective ahead of plan. This operational impact spans all areas of origination, processing, closing, post-closing and secondary marketing and MarketWise projected direct ROI benefit at 5.07x payback with a peak efficiency levels within three years of implementation.

****“Based on our analysis, Blueberry Systems’ RELAY LOS offers a solid approach for lenders to manage business stages and the underlying data flow,” said Jordan Brown, CEO of MarketWise Advisors LLC. “It is also important to note that the indirect benefits of RELAY can potentially outweigh the direct benefits. These would include improvement of loan quality, data management, auditing framework, information security and process flow.”

****“RELAY has been thoughtfully designed with advanced technology and innovative strategies to help lenders manage their loan production pipelines efficiently and profitably. We are encouraged that MarketWise Advisors’ findings validate our value proposition,” said Wil Armstrong, a founder and CEO of Blueberry Systems. “We are proud to count Starkey Mortgage as a partner and are thrilled about their future prospects.”

**By Tony Garritano**

***Everyone is trying to be risk averse. Nobody wants a buy-back. And investors are cracking down. Loans have to be ironclad these days. As a result, technology providers are trying to come up with new ways to support their lender clients. For example, origination vendor Ellie Mae is adding a loan buy-back insurance option to its Total Quality Loan (TQL) program. Here’s how it works:

****TQL is an initiative designed to further enhance the loan quality, compliance and salability of loans that are originated through Ellie Mae’s Encompass360 mortgage management software system. TQL offers a suite of fraud detection, valuation, validation and risk analysis services, tailored to individual aggregator/investor requirements. Ellie Mae’s technology enables correspondent lenders to share the findings and data from those services with investors and other stakeholders in the industry supply chain.

****Correspondent lenders participating in TQL can now choose to insure and be covered for losses of up to $100,000 per loan. Underwritten by affiliates of Lloyd’s of London and Liberty Mutual Group, the insurance policy protects lenders from losses due to borrower and appraisal fraud and regulatory non-compliance. For example, the policy covers a seller against claims based on misstatement of income or assets, employment and occupancy fraud, as well as collateral and valuation fraud. Similarly, it protects against loss if a loan is found to be non-compliant with various regulations, such as Federal Truth in Lending Act Tolerance Tests (HOEPA); Federal, State and Local High Cost Thresholds Review; Fannie Mae Points & Fees, and “HUD-HOEPA” Mortgage Thresholds Reviews.

****The coverage begins at the date of origination and lasts for three years. The policy’s coverage automatically transfers with ownership of the loan so that any party who owns the loan at the time a fraud or compliance error is discovered may file a claim under the policy directly rather than force the loss back to the original lender. While there is a cost to the lender for this coverage, this can be offset by lower loan reserves that are available to lenders with insured loans. Ellie Mae receives an administrative fee for each closed loan covered under a policy.

****The program is designed to offer enhancements to traditional programs available in the marketplace. If a fraud or compliance error is discovered, the party suffering a loss can file a proof of loss and determine whether or not it is covered before the amount of the loss has been determined. This allows efficient repurchase, scratch and dent sale or foreclosure options to be assessed with the knowledge that coverage exists. Often, insurance providers’ practices have prevented policyholders from learning whether or not coverage exists until other options for recourse have been completed (or lapsed).

****Arthur J. Gallagher Risk Management Services, Inc., a subsidiary of Arthur J. Gallagher & Co. (NYSE: AJG), one of the world’s largest insurance brokerage and risk management services firms, is the broker for the program. Justin Vedder, area senior vice president at Arthur J. Gallagher Risk Management Services in San Francisco explained, “This program is a validation of Ellie Mae’s TQL process. TQL customers adhere to rigorous origination standards and follow best practices and as a result automatically qualify for this exceptional coverage.”

****“Over the past several years, the GSEs and investors have put back approximately one hundred billion dollars worth of loans to originators,” said Richard Roof, Ellie Mae’s senior vice president of Business Development. “Our TQL program is a direct response to the industry’s demand for increased quality assurance. It is designed to give investors and sellers greater confidence in the assets that are being originated. Adding optional buy-back protection is simply a cost-effective extension of this concept and further mitigates risk.”

By David Lykken

***Lenders are (or should be) leaders…leaders in your communities and leaders in consumer advocacy. In spite of some iconic individuals, I will assert that the mortgage industry has been void of true leadership for years. In fact, I will go so far as to say that we are in the midst of a leadership crisis. For anyone questioning this assertion, I would point to two indisputable facts:

****>> the current rate of foreclosures in our country

****>> the fact that our federal government felt it necessary to impose a mind-numbing number of new rules and regulations to “bring into control” an industry many believed was out of control.

****While there were certainly many factors beyond the mortgage industry contributing to the housing and economic crisis in which we find ourselves, it is going to take strong leadership at every level to get us out of this economic crisis. Identifying and helping to develop leaders within our industry is what I have dedicated myself to do over the next 10 years. In an upcoming issue of Tomorrow’s Mortgage Executive magazine, I will be writing about our soon-to-be-announced “10-10-10 Initiative” which is to identify, develop and deliver a new breed of leaders to this industry. Here’s what to expect:

****So let’s start with this fact. Leaders need to know where they are (location) and where they need to go (goal/objective) and how to get there (strategy & direction). Leaders have an innate sense that allows them to recognize, prioritize and focus on what the most urgent issues (threats) are of the day. With so many “urgent issues” out there today, which one to focus upon may prove to be the biggest challenge. Realizing this is what gave me the following idea.

****Each week on my weekly radio program, “Lykken on Lending” (LoL), my regular guests and I present what we believe to be the hottest of “hot topics” facing our industry today. (To learn more, go to www.LykkenOnLending.com .) The primary purpose of the LoL radio program is to help leaders digest and determine strategies on how to overcome, versus be overcome by all that are going on out there. For example, it is mind-boggling the rate at which regulators have thrust voluminous numbers of new convoluted and confusing rules and regulations on us. Each week on LoL, we track, report and discuss each of the upcoming rules and regulations developments. Thousands are listening in each week “live” or by downloading the program and finding it a valuable resource as they try and figure out which direction to go on hot issues such as “loan originator compensation”.

****Given the leadership crisis we are facing, I will be writing almost exclusively about LEADERSHIP for the foreseeable future. In my opinion, developing responsible LEADERSHIP is the single greatest need we have as a country and as an industry. It starts with each of us recognizing our role and responsibility as financial advisors helping consumers seeking to finance their American Dream of homeownership and do so in a responsible way that results in stable and secure long-term homeownership. In doing so, we will grow individually and help develop a healthier and more responsible industry, economy and country.

**By Tony Garritano**

***Who says technology doesn’t pay off? Well, it does. Just take servicing for example. It’s a tough space, but for those that automate, they’re doing well. To this point, Wingspan Portfolio Advisors, a Dallas-based diversified servicing company, is leveraging technology and servicing know-how to track ahead of the industry averages in speeding short sales to successful conclusions. The secret to accelerating the short sale process is in keeping the objectives of all parties aligned and the communications clear, finds Robert Shiller, senior vice president of Wingspan’s Enhanced Servicing Solutions, the company’s unit focusing on foreclosure alternatives. While the industry as a whole still takes up to six months to complete a short sale, Wingspan’s average is four to six weeks. Here’s how they do it:

****Even with recent improvements, only 30% of short sales tend to complete nationally, according to some published estimates, while Wingspan is experiencing an 80% success rate. Starting this June, loans held or insured by government-sponsored enterprises must receive responses to offers within 30 days, but this does not ensure improvements in success rates.

****Wingspan Portfolio Advisors speeds up short sales for servicers, real estate professionals and attorneys. It uses its short sale acceleration program for its component and special servicing clients, and offers it for real estate professionals through the Wingspan Real Estate Network (WREN). Attorney-involved short sales benefit through American Home Remedy, a partnership Wingspan recently announced with Jacksonville, Florida-based Realty Legal Service and Home Counsel Group.

****Working closely with primary servicers struggling to handle large volumes of loans on the brink of foreclosure, Wingspan presents short sale offers that have been pre-screened for errors and other issues that traditionally stall the process. Wingspan specialists present offers to servicers, work out junior lien problems and keep track of all required processes using Wingspan’s technology platform. The Web-based platform is used by servicers, investors, mortgage insurers and other stakeholders to understand what is required of them and stay updated on each short sale’s progress via online dashboards.

****“The technology is a great advantage as it keeps everyone on the same page and on track,” says Shiller. “Paper files sitting on desks waiting for decisions largely disappear, replaced with paperless offers that we have vetted, made error-free, and that fall within the economic realities that servicers have shared with us. At the same time, we are able to screen for fraud, get accurate values and condition reports, and eliminate the usual delays.” As a result, the Wingspan short sale can take up to 70 percent less time to complete.

****Ed Delgado, chief operating officer of Wingspan Portfolio Advisors, believes with short sale volumes on the increase, speed to decision and execution are becoming increasingly vital to any successful liquidation strategy. “Real estate agents and brokers have motivated buyers looking for good deals on homes, many of them first-timers. The more we can ease their path to ownership while providing a foreclosure alternative for distressed borrowers, the fewer the neighborhoods that will suffer from extended vacancies and blight,” he says. “At the same time, distressed borrowers are able to reenter the ranks of homeowners much sooner than if foreclosure devastates their credit, and this potentially means millions more home sales over the next three to five years. Short sales benefit everyone, including servicers and investors, with reduced loss severity.”

****Lenders and investors improve sales amounts by 24% using short sales, according to a recent study by McGeough Lamacchia Realty of compiled MLS data for short sale and lender owned (foreclosure) homes sold in 2010 and 2011 in five major markets around the country.

****“We’re demonstrating that short sales can be much faster and far more successful than in times past,” says Shiller. “It is a viable strategy that gets the market moving, finds good borrowers for the existing inventory out there, and minimizes the collateral damage of foreclosure.”

**Strategic Hires Dominate The News**

***Many may see this as a time to retrench. But that won’t prepare your company for the future. Companies like Equator get that message. “From government modification and refinance programs to shadow inventory, the servicing segment is facing challenges it couldn’t have imagined five years ago,” said Chris Saitta, CEO of Equator. “There is a great opportunity for us here and we are confident that Anna and Chuck will play a big role in helping us further our growth and expansion.” As a result, here’s the scoop on the new hires at Equator and a top lender:

****First, Equator, a default servicing technology provider, added two senior executives. Anna James was appointed vice president of marketing and Chuck Harkins has been selected as director of operations. The addition of these two executives is part of the company’s plan to further serve its client base and the marketplace; grow market share among lenders, servicers and real estate agents; and further solidify its position as industry’s leading default servicing technology provider.

****Ms. James, who brings more than 15 years of marketing experience to her post, will lead the company’s marketing efforts. Prior to joining Equator, Ms. James was an independent marketing consultant, whose clients include both global retailing and consumer apparel brands. In her multiple executive positions with Windermere Services Company, a real estate franchising company supporting over 300 franchises, 5,000 real estate agents, she grew the print and online direct mail program to $1.2 million in sales per year, and helped make it the most visited independent website in the real estate industry at that time. Her career includes positions with Tamarac, Inc., Amazon.com, and Zip2 Corporation.

****New Director of Operations Chuck Harkins is responsible for managing Equator’s growth from an operational perspective and ensuring that the company’s policies, procedures, and processes are consistent with the expectations of its clients. Mr. Harkins brings 18 years of experience in the mortgage and real estate industries to his post. He was previously executive vice president and chief risk officer at Occasio Rescap, a California-based real estate investment firm that specializes in distressed residential assets in California and Arizona. At Occasio Rescap, he oversaw and implemented initiatives such as a comprehensive pricing model for valuing distressed assets, investor reporting, and policies and procedures for the acquisition, due diligence, and settlement of trades. Mr. Harkins has held several executive positions in Lending Operations and Capital Markets with Option One Mortgage Corporation in Irvine, California, where he was responsible for credit policy, valuation, product development, risk-based pricing and performance analytics.

****Second, Carrington Holding Company, LLC has brought on Bill King as its Chief Investment Officer and Head of Asset and Risk Management. In this newly-created position, Mr. King will assume responsibility for its two investment-focused business units, Carrington Capital Management, LLC, an alternative asset management firm focused on control-based investing in the US real estate, mortgage and fixed income markets, and Carrington Investment Services, LLC, a registered broker-dealer with the U.S. Securities and Exchange Commission and member of the Financial Industry Regulatory Authority.

****Mr. King brings 20 years of experience in securitized products, and a broad range of trading knowledge including mortgages, asset-backed securities, collateralized-debt obligations and commercial mortgage backed securities. Immediately prior to joining Carrington, Mr. King was head of Securitized Products at Citadel LLC. Prior to that, Mr. King was co-head of Global Securitized Products at JP Morgan, where he previously held other executive positions, including head of US Securitized Products, head of Mortgage Trading and head of pass-through trading.

By Nancy Alley

***After thinking more about the inevitable change that 2011 will bring, I realized it’s not enough to just embrace change—we must allow ourselves to “catch” the spirit of innovation that is driven by change.

****Resolution #2: Capture the Spirit of Innovation

****As 2011 nears, let’s make a conscious decision to tap back into our childhood spirit to help us “catch” the spirit of innovation. As our children look around them this holiday season with wonderment, awe and promise; let’s do the same for our industry. Take a step back and realize that through the turmoil of the past few years—we have grown wiser, we have survived and we can now use innovation to chart the course for the future.

****For the points of change that face us in the future—Dodd Frank, a contracting market, and a potential GSE overhaul just to name a few—just imagine the possibilities and ask yourself:

****>> What issues will these changes cause for my organization? For my customers? For my partners? My guess is you’ve already started this process, but now I encourage you to document it, study it and maybe throw in a dash of child-like enthusiasm and belief that you can affect a positive outcome.

****>> How could we do things differently going forward to mitigate the impacts of these changes? Forget how you’ve always done it. Think like a child and imagine.

****>> What tools or solutions do we need to make this future world a reality? Construct your Holiday Wish List, check it twice and send it out for feedback.

****‘Tis the season to believe. I strongly believe we need to resolve to do exactly that and use our imaginations to drive innovation. And if you agree, I’ll throw in the cookies and milk for free.

**By Tony Garritano**

***The industry is still talking about the Avista acquisition. However, Avista isn’t the only prominent LOS making headlines. I talked with the executives at Mortgage Builder yesterday and they have some exciting plans for this year. When I’m able, I will tell you all about it. Stay tuned. But today I want to talk about a recent integration that Mortgage Builder completed that will really improve the appraisal space. Here’s the scoop:

****Mortgage Builder has completed a technology integration with InHouse Inc. of Jacksonville, Florida, the providers of the InHouse Connexions appraisal management platform. The integration came as a result of requests by Mortgage Builder clients that the InHouse technology be integrated with the Mortgage Builder LOS, as they preferred the appraisal management capabilities and flexibility InHouse offers. With the integration in place, Mortgage Builder users can conveniently access InHouse Connexions and its full menu of appraisal options.

****“InHouse Connexions was clearly the choice of several clients, including one of our largest,” says Kelli Himebaugh, corporate vice president at Mortgage Builder. “As soon as we started working with them, it was easy to see why lenders were wanting InHouse to be available directly from within their favorite LOS. The Connexions platform offers the ability for lenders to use their own appraisal panels, order from appraisal management companies (AMCs), or access InHouse’s own AMC when convenient,” she says. “The cloud-based technology provides full reporting and complete control over the appraisal effort with maximum flexibility.”

****Jennifer Creech, InHouse president and CEO, agrees that the integration with Mortgage Builder makes a great deal of sense for both companies because of their similar philosophies and reputations. “InHouse is a company with a flair for technology innovation,” she says. “Mortgage Builder is a proven technology company that has always invested in innovation and service enhancements to improve the experiences of its clients.  We’re following a similar path, and we’re finding that lenders strongly desire the control over their businesses that a wide menu of options provides,” she notes. “Mortgage Builder’s clients are tremendously loyal and the company’s service is legendary. InHouse and Mortgage Builder make a great team.”

****Both companies see flexibility as a key ingredient for success in today’s mortgage technology. Mortgage Builder offers an end-to-end LOS system in which everything is integrated, from product and pricing engines to electronic document management. Many features, including compliant loan documents, are available at no cost, and delivery options are completely flexible. Lenders can opt for Software as a Service cloud-based delivery, more traditional installed business models, or combinations of both. They can even choose to pay for services only when loans close successfully. InHouse provides a similarly flexible blend of options on the appraisal management side, allowing clients to identify and use appraisal companies in some areas and AMCs in others, all with fast, automated ordering and delivery. Full performance metrics and reporting on the overall appraisal effort brings complete transparency, and InHouse has one of the few direct connections to Fannie Mae and Freddie Mac’s UCDP (Uniform Collateral Data Portal).

****“Both companies clearly believe in giving clients the most for their technology investment,” says Mortgage Builder’s Himebaugh. “We are fortunate to be working with their fine team and our clients will appreciate the array of benefits our integration with InHouse brings to the table.”

**By William E. King**

***It is common for lenders to get several valuations for a single property to ensure an accurate determination of value. These valuations need to be reconciled into a single, overall property valuation that will become the basis for the lending decision. Reconciliation is a method by which an appraiser or reviewer concludes a final, well-supported valuation of the property.

****In today’s environment of The Dodd-Frank Act, UCDP, and CFPB, managing appraisal outcomes can be challenging. Chief appraisers need to “see through” appraisal reports and challenge or dismiss valuations that aren’t well supported. In light of the highly regulated landscape, this requires greater objectivity than ever before.

****Key challenges that tend occur in reconciling estimations of property value include:

****>> Appraisal Reconsideration: If the property value is deemed unjustified by the owners or loan officer, an appraiser can be approached to reevaluate the value to determine if something was inadvertently excluded from the appraisal. Although rare, third parties will sometimes claim the property was over-valued given the comparables in the neighborhood.

****>> Avoiding Undue Influence: By definition, an appraisal is an unbiased opinion of value. USPAP requires that 1) an appraiser have no bias to the property; 2) appraisal results not be contingent on a predetermined result; and 3) the appraiser’s compensation not have any bearing on the outcome. Dodd-Frank has helped reduce undue influence on an appraiser, however, pressure does still exist.

****>> Mitigating Rep & Warrant Issues: When faced with a buy-back situation, one of the first areas of focus is the appraisal to ensure that it conformed to GSE appraisal requirements. If not, lenders may be faced with repurchasing a loan and dealing with the foreclosed property directly. Due diligence in appraisal review at loan origination, including reconciling multiple valuations can go a long way in preventing Rep & Warrant related buybacks.

****>> Managing Loss Severity: It is important that a property be correctly valued to minimize loss severity in short sale and REO situations.  Multiple valuations and a thorough reconciliation of those values can save lenders from more significant losses with defaulted/foreclosed properties.

****Many tools and practices are available to help ensure a higher level of accuracy and gap management in arriving at a property valuation conclusion. Thorough appraisal reconciliations must be supplemented with appropriate analytic tools. It is incumbent on lenders, whether through an AMC or direct panel management, to ensure the quality of the vendors utilized. AMCs derive their value through quality reviews and it is important for them to focus on the factors that really drive support for the value opinion. This topic will be discussed by a variety of industry experts in more detail during a panel at the 2012 Predictive Methods Conference June 4-6 in Southern California.

**By Tony Garritano**

***Everyone asks: Is correspondent dead? I respond: Sure, a lot of the bigger players may be pulling back or exiting, but that doesn’t mean the space is gone. In my estimation, it just needs retooling. It needs a fresh approach. New entrants will reinvent how correspondent lending is done. What correspondent really needs is technology to create a more trusted process. I was told of a company offering technology to do just that. The purpose of this new automated solution is to help this sector of our industry shoot back to life. Here’s the scoop:

****Genpact Limited, a business process and technology management provider, has released virtual correspondent and private-label origination applications for its Quantum Mortgage Operating System (MOS). The applications are leveraged with Genpact’s Mortgage Business Process as a Service offering (BPaaS), which combines the technology with Genpact’s business process services, data analytics and mortgage domain expertise.

****The virtual correspondent and private label applications combine Quantum MOS’ data-centric loan automation platform with Genpact Mortgage Services’ BPaaS offering to increase effectiveness and reduce the loan cycle time by as much as 30%. The applications can be set up in either a delegated or non-delegated model, enabling users to customize the workflow to best suit the needs of each lender.

****“Lenders who can push enterprise software to their correspondents while also leveraging business process services in the back office will be able to realize lower costs and quicker closing times,” said Roger Hull, vice president of Genpact Mortgage Services. “Genpact’s Quantum MOS private-label and virtual correspondent applications utilize a correspondent web portal, underwriting apps and automated quality control processes to increase accuracy, ensure compliance and improve risk transparency.”

****The private-label origination and virtual correspondent applications are hosted within Genpact’s Quantum MOS, which uses a data-driven approach to automate every step of the loan process. The platform combines automated decision-making, highly efficient processing, and file transparency to provide valuable data and insights for more accurate underwriting.

****“To be profitable in today’s market, lenders must eliminate as much waste in the pipeline as possible without sacrificing quality,” said Rob Pommier, vice president of Genpact Mortgage Services. “Genpact’s Quantum MOS applications enable our lenders to leverage the mortgage ecosystem to quickly, accurately and effectively originate, close and trade high quality mortgage assets through their correspondent channels.”

****You see what I mean, it just takes a little creativity and the willingness to reshape the process to get correspondent rolling again. Stay tuned for some more excited news coming from Genpact. I hope to be able to share it with you soon.

**By Michael Hammond**

***Last week I started to tell you about an article by Karl Stark and Bill Stewart called “4 Rules for Better Marketing” that will help anyone serious about marketing get ahead. Let’s face it, everyone wants to get ahead, and you can succeed even in the current tense mortgage market. The first two rules detailed in the article advised companies to No. 1 know your client, and No. 2 create a compelling reason for that client to do business with you. Here’s the last two rules to help ensure your future marketing success:

****Rule No. 3: Hit Them Hard When They Are Ready to Buy

****With the right product at the right price and a promotion tailored to an attractive niche, you must be relentless in reaching out to potential buyers at the right time—when they’re most inclined to buy. A typical window during which a potential customer is willing to buy lasts from six months to two years. If you do not convert them in that time period, the prospect is likely to either choose a competitive offering or decide not to purchase.

****Therefore you need to redirect your marketing spend toward making repeated impressions on these customers. By better targeting high-potential customers, you can redirect spend away from lesser prospects, thus improving their campaign effectiveness without increasing overall spending.

****Rule No. 4: Experiment and Learn to Improve Your Mental Model of the Customer

****Your ability to predict a customer’s “ripeness” (willingness to buy) and “sweetness” (potential lifetime value) can be improved by taking a more experimental approach to the market. This requires:

****>> Running pilots of different marketing messages and four P (Product, Place, Price, Promotion) combinations

****>> Measuring the results of each pilot, uncontaminated by other marketing programs

****>> Analyzing the data deeply to extract the desired learnings

****>> Investing in ways to lower the cost of running these types of pilots

****>> Sharing the learnings across the organization

****These rules and actions are all easier said than done, but they can be a key source of value. By investing in this approach, you may be able to cut your cost per acquired customer in half and generate a positive return doing so. Great companies use this approach to marketing to create a sustainable competitive advantage. It can work for you too.

**By Tony Garritano**

***No, I haven’t heard of another LOS acquisition, but I was recently treated to a demo of a new offering. I thought it was very slick. As it turns out, more LOS companies are trying to harness the power of mobile technology. Franklin, Tenn.-based Wipro Gallagher Solutions (WGS), a provider of end-to-end lending solutions for financial institutions, introduced Enterprise Mobile Origination (e.MO), a native iOS lending productivity suite for the iPad, designed to enable sales teams in the field to run and originate new loans of all types. Here’s the scoop:

****The e.MO application integrates with any loan origination system (LOS), including WGS’ NetOxygen LOS, and provides all the tools to keep sales informed and connected to the customer. The application monitors leads and manages all associated contacts through the entire lending process. It maintains lead status, follows up on additional requirements, and requests credit and AVM results while creating a lead. Its alert and notification system monitors borrower activity via user-friendly iPad push notifications for the duration of the lead throughout the entire lending lifecycle.

****The e.MO application positions loan originators as consultants to their customers with its mapping and house price index (HPI) designed to offer well-informed decisioning support to borrowers based on the ability to map their property of choice and compare real estate opportunities in the geographical area.

****e.MO’s built-in calculators compare items, including fixed rate versus variable rate products, loan terms and payments while in the field with a borrower and engages leads with graphical representations of their buying power. Its reporting dashboard easily communicates information to loan officers and compares lead generation using charts representing lead status, lead completion and performance levels within the branch, region and country.

****Other e.MO tools include a product filter that leverages the product and pricing engine of choice and provides significantly reduced turnaround time for the origination process with information readily available on the iPad. Loan information is immediately available to processors, underwriters, funders and closers through the LOS via seamless real-time integration with e.MO.

****“Tablets are shifting the way business is conducted for the entire lending lifecycle, yielding a net effect of improved customer service and satisfaction,” said Narayan Bharadwaj, business head for WGS. “We already offer NetOxygen on the cloud and the extension of our solution to a mobile device further strengthens our value proposition in line with our overall strategy to provide multi-channel, product-agnostic enterprise lending solutions to make the lending process as convenient as possible for borrowers.”

**By Gregory Crosby**

***The pressure on lenders to remain viable in the market is ever present. They need to achieve volume growth that is both profitable and manageable. This determination is rather easy to conjure; however, what isn’t easy is how to go about it.

****For those lenders who participate in the secondary market, technology can make the largest impact in changing the bottom line. Technology can best help address the three areas where they can look to make an impact on their business. Technology can help lower operating costs by increasing efficiencies. It can also provide a clear view of their operations, and it can better prepare them to act and react to ever-changing market conditions.

****As a technology provider in this field for more than 20 years, we have participated in a number of recent success stories where the proper application of and adherence to technology has helped lenders not only survive, but thrive in today’s market.

****For example we implemented our secondary marketing solution offering for a small-sized originator. Their operation was lacking in quality control and was rife with manual tasks that supported a high maintenance/high risk environment. They dedicated an inordinate amount of trained resources to maintaining their pipeline and fixing errors as they happened. They had been forced to offer a product that had a high margin embedded as they were not confident they could manage the interest rate risk.  It was inevitable that their volume levels were low. They felt trapped, as their volume levels and staff experience prevented them from justifying an investment in software and staff.

****However, they made the decision to move forward as the status quo was no longer tolerable. Concurrent with implementing PowerSeller they hired a capable person with only a small amount of secondary marketing experience.  The solution was able to help streamline and automate tasks that had been time-consuming, error-prone manual operations. The willingness of the originator to embrace the technology and to hire a person who could utilize the solution to price, pool and hedge the pipeline allowed them to roll out new products and pricing strategies that improved volumes and overall profit levels.

****Other examples of technology’s impact on lenders include transmitting loan delivery data in a variety of formats including the ULDD; segregating and monitoring a variety of execution options; gaining information insights through the various reporting and business intelligence tools, position risk management from a perspective that fits a specific management style, and better insight gains into fallout tendencies and using that knowledge to reduce hedging costs features.

****By embracing tools such as a quality secondary marketing solution, lenders were able to manage their secondary business in an opportunistic, adaptive, time efficient, cost effective and repeatable manner. This set them on the path to becoming more efficient while having a better understanding of their position in the market and better preparing them to react to changing conditions to improve their results.

****We will be at the upcoming Secondary Marketing Conference in New York City May 6 through May 8, and we invite you to join us for a brief discussion of your secondary marketing operation, both present and future, and see if we can help you achieve and exceed your performance goals. Call me at 800-628-4687 x149 or email me at crosbyg@asconline.com.

**The Power Of The Web Continues**

***Clayton Holdings LLC, a provider of due diligence, underwriting, surveillance and default servicing to the residential and commercial mortgage and fixed-income industries, announced today that it launched its redesigned website. The company said that it designed the new site to better align it with the services that Clayton is currently providing to mortgage servicers, originators, commercial banks, investors, hedge funds and credit unions. Here’s the full story:

****“Over the past few years, the composition of our offerings has adapted to a changing market and client base,” explained Tom Donatacci, executive vice president of business development at Clayton. “Although loan file reviews and servicer surveillance remain the cornerstones of our business, we have grown our presence in commercial real estate due diligence and small balance servicing; additionally, we are very active in performing foreclosure reviews and assisting regulated institutions with their operational planning and regulatory compliance.”

****Donatacci added: “Our new website gives current and future clients a clear, intuitive way to learn about our services and solutions. Visitors to our site can stay current on Clayton, read articles on industry issues, see upcoming conference schedules, and reach the appropriate professionals quickly and effectively. Identifying the expertise to solve complex business problems with speed and efficiency has never been more important than in today’s market.”

****Clayton Holdings LLC, headquartered in Shelton, Connecticut, provides information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities. Clayton offerings include residential and commercial loan due diligence, consulting, surveillance, staffing solutions, independent pricing, and risk-based analytics. The company provides customized residential and commercial special servicing solutions through its Quantum Servicing subsidiary and REO management, BPOs and a short sale program through its Green River Capital subsidiary.

**By Tony Garritano**

***As you all know, D+H, the parent company of point-of-sale vendor Mortgagebot, acquired loan origination system Avista Solutions for $40 million. I broke the news yesterday. Since the scoop, I’ve gotten a lot of reaction from various industry experts. It’s great to hear your thoughts. Now that we’re about 24 hours removed from the news breaking, I thought that I would share what people are saying about this deal. I also got a chance to talk with Matt Cotter, senior vice president of sales and marketing at Mortgagebot. Here’s the industry reaction to this big acquisition:

****“Avista is a perfect fit,” said Cotter. “Our customers have been asking us to get into the LOS space for years. The challenge is that we are focused on the point-of-sale and to build an LOS would distract us. So, the acquisition made perfect sense. Also, Avista is a Software as a Service-based product, which fits with our culture.

****“For D+H, this continues their process of diversifying their revenue and geographic footprint. Avista will act as a subsidiary. Mark Phlieger and his entire team at Avista will stay. Mark reports into Scott Happ of Mortgagebot, who reports into D+H. This acquisition is about growth and adding value.”

****Personally I have known Mark Phlieger for many years. He is certainly a friend. Good for him that he started the company and built it to the point that it could be sold for a nice price tag. He did a great job. Also, kudos to Mortgagebot and D+H for acquiring an LOS as part of their strategy to expand in the U.S. mortgage space. To me, it sends a message that both companies are committed to our space.

****So, what happens now that the acquisition is done? “Priority No. 1 is to get the files from Avista and Mortgagebot talking back and forth. From there, we’ll do a tighter integration. It’s a high priority. Historically there has been best-of-breed applications where you have great functionality but you trade off with the integration process. We want to provide an end-to-end solution that is best-of-breed.”

****Celebration aside, some of the reaction that I have gotten since breaking this story has been mixed. Off the record, several origination vendors are a bit fearful. Now that POS Mortgagebot has an LOS in Avista, many LOS vendors see Mortgagebot as competition. They know that the end goal will be, as Cotter suggests, to come to market with one offering at some time in the future. Some of these vendors have said off the record that they may not integrate to Mortgagebot as tightly and may look to some of Mortgagebot’s competitors instead. They don’t want Mortgagebot trying to sell their clients on switching off of their LOS of course.

****In my talk with Matt Cotter, he was understanding and sympathetic to their concerns. He told me, “We have hundreds of joint clients with many of the LOS systems. For us it is important that we continue to work with every LOS. We are going to have to make sure that we deliver on our commitments and ease their concerns over time.”

****What’s the big takeaway from this deal? “This is best-of-breed plus an all-in-one approach,” answered Cotter. “These are two systems that are functionally rich that will eventually be combined into one system. The products will be end-to-end, but they’ll also stay stand alone to compete on their own merits. The customer will decide what they want. As a theme, both Avista and Mortgagebot focus heavily on the midtier. Both products are also SaaS, and that’s something we believe in.”

****I’ll keep you posted on next steps. In the meantime congratulations to Avista, Mortgagebot and D+H. The mortgage industry is worth investing in. The people in this space are dedicated. This deal validates our industry’s clout and relevance.

**By Tony Garritano**

***I don’t usually do this because I know that you don’t like getting multiple e-mails a day and I don’t want to spam you. However, this warrants an extra e-mail, believe me. I always expected more consolidation in the LOS space. It’s been too slow as far as I’m concerned. Sure, we saw DataTrac get acquired recently, but that’s it. Now the big news starts my friends. Today I learned that Avista Solutions has been acquired. Here’s the scoop:

****Davis + Henderson Corporation today announced that it has acquired Avista Solutions, Inc. of Charleston, South Carolina, a leading provider of Software as a Service (SaaS) mortgage loan origination software to community banks and credit unions in the United States.

****The acquisition adds to D+H’s customer base and expands the range of integrated technology solutions D+H offers to the North American financial services industry by complementing the SaaS consumer point of sale (POS) mortgage origination platform it delivers to more than 1,100 U.S. banks and credit unions through its Mortgagebot subsidiary. Like Mortgagebot, Avista’s loan origination system (LOS) technology is delivered via the Internet as a service and revenues are generated on a subscription-fee basis under long-term contracts.

****“This acquisition is fully aligned to D+H’s “follow your customer” approach – in fact, customers have told us unequivocally that they want us to extend our offering with an LOS platform,” said Gerrard Schmid, CEO of D+H. “With Avista, we’ve added an innovative, fast growing LOS business featuring proven capabilities that are highly synergistic to those we offer through Mortgagebot. Together, we now support the entire mortgage origination process for U.S. lenders and provide customers with a comprehensive suite of products that enable efficient, effective growth from origination through to closing. We are pleased that Avista’s team, including Mark Phlieger, its founder and CEO, are joining D+H to drive future growth.”

****Founded in 2001, Avista is a profitable and growing financial technology business with over 150 financial institution customers and a technology suite that includes a complete loan origination system with integrated product and pricing engine, document imaging, workflow capabilities, and a comprehensive network of seamlessly integrated third party mortgage service providers.

****“We believe that a combination of our innovative LOS technology and D+H’s industry leading mortgage point of sale solutions will allow us to jointly reach more customers, more rapidly, and with a more effective one-stop value proposition,” said Mark Phlieger, CEO of Avista. “Speaking on behalf of our team at Avista, I am excited by the prospects of taking our business to the next level.”

****The purchase price is $40 Million (USD) payable in cash, and funded from D+H’s existing credit facilities. The addition of Avista is expected to provide accretion for D+H shareholders in 2012, on an Adjusted net income basis.

**By Tony Garritano**

***Anyone who has purchased a home is familiar with the stack of paper that has to be signed to finalize the loan transaction. Less known are the challenges lenders face to get the loan to the closing table–complex interactions behind the scenes, multiple participants needing access to the same file and regulation requirements for data transparency. PROGRESS in Lending has learned that Xerox Mortgage Services is helping lenders simplify the process with new features for its BlitzDocs intelligent collaboration network. Here’s the scoop:

****To help both internal and external participants work together more effectively, BlitzDocs’ new advanced workflow capabilities automatically queue loans to accelerate the process from origination to closing. In addition, using the new manager dashboard, lenders can track loan status and better manage productivity and workload across various people and processes.

****BlitzDocs now also provides annotation capabilities that allow lenders to easily edit, sign and comment on paper-based images and electronic documents rather than printing out documents to hand write notes or add signatures. BlitzDocs supports multiple versions of annotated documents so lenders can choose what is viewed by third parties and which version is sent to investors. Lenders also benefit from an audit trail showing who made the notes and when.

****“The enhancements made to BlitzDocs are well thought out and take our paperless collaboration to the next level,” said Jennifer Edwards, vice president of Town and Country Banc Mortgage Services, Inc. “BlitzDocs continues to help us simplify our processes and allows us to connect with all necessary parties from origination to post-closing.”

****Lenders working with Xerox Mortgage Services benefit from an extensive network of BlitzDocs certified partners and providers, now including Medallion Analytics and MRG Document Technologies.

****“To save time and adapt to industry regulations, lenders are recognizing that basic imaging is not enough – they need to extend collaboration beyond their own business,” said Nancy Alley, vice president and general manager of Xerox Mortgage Services. “Xerox is driving this industry change with new technology and a growing network of partners that make it easier for loan participants to work together to meet borrower needs and stay one step ahead of changing regulations.”

**By Ted Hicks**

***The commonly used definition of workflow as one linear process is simply outdated. In a mortgage shop there are multiple processes going on at the same time. Most technology platforms can only handle the main workflow. A loan process goes from point-of-sale, to processing, to underwriting, etc. Many people in the mortgage space think of a loan process as a one-dimensional process, but what about the lock process, the confirmation process, the compliance process, etc? There are several processes going on at the same time as the loan is going through the workflow. So, how do you make everything happen in a streamlined, efficient manner? Here are my thoughts:

First, it’s not just about notifications.  It’s about having the type of intuitive technology that functions transparent to the user but is able to generate necessary information to a specific user at precisely the right moment. As such, the system needs to identify the different loan processes properly. If the system doesn’t understand parallel processes outside of the traditional loan workflow, it simply won’t work. You also need to see what’s going on and what sub-processes need to be done and what triggers those actions.

Lenders know that they have to accomplish all these things, but they don’t think of it as a multi-dimensional process and technology doesn’t help, quite frankly. Today most technology tools track milestones. What’s the problem there? The system looks at things as a serial workflow. In a parallel workflow system several steps can occur at the same time.

Every loan has milestones, but lenders need to contort the technology to lock a loan at a certain time or to re-disclose if the need arises. Why? The technology should do that for the lender. So, why doesn’t technology do this today? Vendors realize the complexity of the mortgage process, but the systems are old, which limits how a system can work. If a vendor thinks about parallel workflows they are thinking about creating new technology because their existing technology won’t cut it.

In the end, just as the definition of workflow has changed, technology needs to change as well.

**By Tony Garritano**

***We have seen the GSEs launch a number of requirements that try to ensure loan quality. They are cracking down for sure. Most lenders are fearful, but they don’t have to be. Technology is always there to help. For example, PROGRESS in Lending has learned that Interthinx has released its new Watchlist Review Module, a stand-alone application that allows/enables lenders to check all loan participants against several industry lists to ensure compliance with Fannie Mae’s Loan Quality Initiative (LQI) as well as rules from the Office of Foreign Assets Control (OFAC) and the Bank Secrecy Act (BSA). Here’s the scoop:

****“Much of the risk involved in the mortgage loan transaction rests with the loan participants,” said Gayle Shank, vice president of product management at Interthinx. “Knowing whether these individuals — including the personnel involved in the closing — are on any industry lists is a critical due-diligence step that federal regulators expect lenders to take. Those who fail to do so greatly increase the risk associated with a loan transaction.”

****Shank pointed out that the BSA requires lenders to screen closing participants against industry watchlists but said that lenders lacked a comprehensive way to do so. The new Watchlist Review Module solves that problem by screening individuals and companies against all exclusionary lists at the same time. “It’s a great time-saver for lenders because it eliminates the need to visit and search various individual websites,” she noted.

****The module uses name-matching software combined with algorithms to identify matching records. The system provides a customizable, intuitive report through a single-source interface.

**New Data Shows Improvement**

***According to Equifax’s March National Consumer Credit Trends Report and Creditforest.com, a joint product of Equifax and Moody’s Analytics, total delinquent first mortgage balances are under $500 billion in March 2012, the lowest since Jan. 2009. As of March 2012 there were a total of 49.5 million outstanding first mortgages, nearly an 11% decrease from the peak of more than 55 million in March 2008. The decline is caused by high foreclosures and loan payoffs and low homebuyer demand. Of delinquencies within existing home equity credit lines, an overwhelming 79% come from loans originated from 2005 to 2007. The number of revolving home equity loans is at a five-year low, with 11.6 million outstanding as of March 2012. Credit levels are also continuing to drop, falling 25% from the peak of $1.3 trillion in 2008. Other highlights of the data include:

****First Mortgage

****>> Mortgage balances were 3.5% below their year-ago level in March, having now posted year-over-year declines in the previous 36 consecutive months.

****>> Seventy-one percent of all first mortgage delinquencies are from loans taken out in 2005-2007.

****>> The share of first mortgage loans transitioning from current status to 30-days past due is at its lowest level since June 2007.

****>> The share of first mortgages transitioning from 60-days past due to 90 days past due is at its lowest level in 59 months.

****>> Loans in severe delinquency status, defined as those 90 or more days past due or that have started the foreclosure process, has fallen steadily over the 24 months ended March 2012 and now stands at $477 billion.

****Home Equity Revolving Credit

****>> Existing balances have dropped 17% from March 2009 to 2012, as home loan originations struggle while foreclosures force write offs.

****>> New home equity lines of credit opened in January 2012 were 16% higher than the recession low of $4.3 billion in Jan. 2009, but 67% lower than Jan. 2008 ($15.2 billion).

****>> Utilization rates, the ratio of balance to credit limit, have stayed at or near 55% since March 2009, although since that time the available credit declined from $575 billion to less than $470 billion.

****Home Equity Installment Loans

****>> Home equity installment balances have dropped 46%, down to $150 billion in March 2012 from $275 billion in March 2008.

****>> In March 2011, delinquent balances in foreclosure totaled nearly $862 million. In March 2012, that number had decreased nearly 30% to $604 million, the lowest since mid-2007.

****>> Total delinquency rates in March 2012 are 14% lower than in March 2011.

****“The residual effect from the recession and housing bust continues to be an obstacle for both lenders and borrowers in the housing market,” said Equifax Chief Economist Amy Crews Cutts. “We’re seeing effects of the economic recovery within existing accounts in the form of fewer delinquencies and foreclosures, but not a substantial amount of new activity as home sales and resulting new home financing fail to keep pace with payoffs and foreclosures.”

**By Tony Garritano**

***As we all know there is a big push toward being as risk averse as possible. Investors are cracking down and nobody wants a buyback. So, if you’re a lender, what do you do? Dominic Iannitti, president and CEO of DocMagic, a provider of loan document preparation and delivery solutions for the mortgage industry, called on all originators to integrate automated loan file audits in their workflow throughout the mortgage production chain, from the time borrowers submit an application to the time loan file documents are prepared for delivery to the secondary market. Here’s why:

****“The traditional approach has been to perform an audit at the conclusion of the loan, before closing, but that’s not good enough anymore,” Iannitti said. “Only by monitoring compliance at every stage of the loan production process – from the time a borrower submits an application, to the time documents are prepared and packaged for investors, to every stage in between – can we be assured that the loans we originate are going to meet investor guidelines and compliance requirements so that down the road, lenders won’t be plagued by repurchase demands.”

****Compliance remains a serious issue as evidence of problematic loan files in the mortgage industry continues to persist. For example, Fannie Mae, the largest purchaser of residential mortgages in U.S., reported in February 2012 that it made a total of $23.8 billion in repurchase requests from lenders during 2011. That was an increase from $13.1 billion in repurchase requests in 2010. In fact, some lenders continue to owe billions to Fannie Mae for troubled loans.

****“With many of the loan parameters being set at inception, data integrity is essential to the entire origination cycle. Not only does a lender need to be aware of data that has changed, but equally important is data that has been lost along the way,” Iannitti continued.

****Technology exists today to make it possible for lenders to be more risk averse as Iannitti suggests. So, my question is: Why aren’t more lenders using it?

**By Michael Hammond**

***How much do you spend on marketing? Are you getting a return? I talk to a lot of companies about marketing strategy. I find it amazing what I hear some times. Companies are all looking for a silver bullet. They want an easy way to get an immediate return. Sorry to say, the old adage life isn’t easy certainly applies. However, I ran across an article by Karl Stark and Bill Stewart called “4 Rules for Better Marketing” that will help anyone serious about marketing get ahead. Here’s what they advised:

****Rule No. 1: Bring a Rifle to the Hunt, Not a Shotgun

****Contacting a potential customer with a marketing “impression” is not necessarily very expensive. A direct mail campaign might cost as little as a few cents per impression for an insert in an existing mailer, or a dollar or more for a catalog. Hypothetically speaking, mailers cost roughly 20 cents per impression.

****With these mailers you target a very broad range of potential customers. Is this the right approach? Probably not. This “shotgun” approach shows in the results: The efficacy is only 0.1 percent – 0.3 percent, which means that you must reach between 300 and 1,000 potential customers for each customer that you acquire. This is how 20 cents per mailer translates into $70 per new customer acquired.

****Better targeting would improve the results. You already have a wealth of historical customer data that can provide telltale information on which potential customers are ripe for purchase. For example, if you’re a lending looking to get new borrowers, when a customer gets married their purchasing patterns change dramatically. Targeting customers based on recent behaviors and life events can dramatically increase their “hit rate” and lower their cost per customer acquisition.

****Rule No. 2: Make Them an Offer They Can’t Refuse

****Tailoring existing products or creating new products for customer niches can be expensive, but the payback may be worth it. By better understanding their customers’ business and life stages and purchase patterns, you can take the first step toward treating the customer base not as a monolithic whole, but as a collection of niche markets with different needs and behaviors.

****The second step is to tailor product offers to those niches, using the four Ps (Product, Place, Price, Promotion) to create offerings that are appealing to a given niche.

****What are the other two rules? I’ll tell you next week.

**By Tony Garritano**

***There’s a lot of talk about going paperless, especially with new regulation asking lenders to be more transparent. How do you do that? You move to a more paperless process where more parties are invited to electronically collaborate. You also have an electronic audit trail that is not possible in a paper world to not only ensure, but to prove compliance. Further, vendors are stepping up to provide this type of service. For example, PROGRESS in Lending has learned that VirPack, a provider of document management and e-delivery solutions for the mortgage industry, launched the next generation of its end-to-end paperless platform, Enterprise Center (EC), highlighted by Automated Document Indexing (ADI) which significantly reduces the manual indexing process and eliminates a dependency on barcode separator sheets. Here’s all the details:

****VirPack’s ADI is completely integrated into EC, and is offered as an automated step in EC’s existing workflow capabilities. VirPack’s ADI leverages full text recognition followed by an analysis of the text to classify documents, and its document library is dynamically updated regularly to include new or non-standard document types.

****“VirPack’s ADI is a game-changer for lenders,” said Wayland Pond, vice president of sales and marketing. “In looking for ways to create better efficiencies, lenders have asked us to automate the indexing process, and we have done that. Via our Automated Document Indexing feature, we’ve taken manual steps out of the process so lenders no longer have to worry about who will index documents and when they will be indexed.”

****Additional time and cost saving features in the latest version of EC are on-image annotations, including the ability to add a signature and date to an imaged document, thus eliminating the need to print, sign and rescan applicable documents.

****Enterprise Center was designed to provide lenders a single platform for paperless operation from origination through post-closing, including fully indexed e-delivery to investors, the Department of Housing and Urban Development (HUD), QC/due diligence companies and other business partners.

**Industry Sees Fraud Rising**

***Ernst Publishing Company, a specialist in land recording requirements for almost two decades and processing more than 120,000,000 transactions annually, recently released the results of a title industry survey, revealing thoughts and perceptions held by industry insiders regarding mortgage fraud. The survey touched about 9,000 industry participants, many of whom provided detailed answers. And what they had to say about the state of mortgage fraud was not encouraging. Here’s the scoop:

****About 40% of respondents felt that fraud in real estate transactions had increased in the last year, while the respondents were evenly divided on the topic of which type of fraud they were most concerned about. Among the choices: “robo-signing,” identity theft, integrity of the record, fraud within the loan transaction, and foreclosure fraud.

****“It’s clear that lenders are viewing mortgage fraud as a very serious issue and a growing problem,” said Jan Clark, senior vice president of Ernst Publishing. “We discussed the results with members of the American Land Title Association and the Property Records Industry Association, and while our survey revealed that about half of respondents don’t believe a national recording system wouldn’t have any impact on fraudulent practices, the idea of a national registry provoked quite a debate.”

****The survey also revealed a lukewarm response to whether or not the CFPB/RESPA changes to the HUD and GFE had helped to mitigate fraud, with only about 20% saying they believed the new rules had a positive impact. Respondents felt that additional steps to combat fraud would be to improve technology solutions, increase notary responsibility, and further certifications for title agents and loan officers.

****Ernst Publishing does not offer fraud risk mitigation products or services, but performs research regularly on important industry issues as a service to the industry.

**By Tony Garritano**

***Last week I told you about how origination vendor Mortgage Cadence was going mobile. It’s the wave of the future my friends. Today PROGRESS in Lending has learned that LenderMobile, a provider of mobile mortgage loan applications for iPad computers, has upgraded LenderMobile, its flagship application, to enable the ordering of vendor services. Loan officers and other originators now can order, directly from their iPads, credit reports, identity checks, tax return verifications, flood determinations, among other third-party vendor requests. Here’s the scoop:

****When loan officers and originators order third-party vendor services on the iPad using the new ordering feature of the LenderMobile+ app, the necessary forms, such as the IRS 4506-T for tax return transcripts, are forwarded to the LenderMobile cloud computing system where they are automatically validated, processed and sent to the vendors. The information from the vendors is received and stored in the LenderMobile cloud. Instant vendor results are immediately available on the iPad for review by loan agents and then can be forwarded to loan origination systems (LOS). For vendor orders requiring more processing time, an Apple push notification will appear on the iPad, alerting loan agents and originators when the results from the vendor are available.

****By using LenderMobile+, loan originators can fill in all the required mortgage application forms, save the loan data and transfer it to their LOS. Borrowers can electronically sign the loan application directly on the iPad.

****The LenderMobile+ application can be downloaded at no charge from the online Apple App store. A monthly subscription is required for loan originators using the LenderMobile+ app to order services from third-party vendors and submit mortgage loan documents to their LOS. The subscription is available on www.LenderMobile.com.

****“LenderMobile+ can support a list of third-party service providers that is easily customized and expanded to accommodate the preferred vendors of each mortgage lender,” said Iordan Gavazov, CEO and co-founder of LenderMobile.

****“Loan agents using the services ordering feature on our iPad app are able to request a product and price list for a particular loan application from their product and pricing matrix vendor,” Gavazov added. “Borrowers can then choose the mortgage product and price that best suits them, right on the iPad.”

**Mortgage Network Profiled**

***Mortgage Network, Inc., an independent mortgage lender, has released the results of their March 2012 Customer Satisfaction Survey showing that over 99% of March’s borrowers would use Mortgage Network again. It also concluded that over 99% would recommend a friend, a standard that Mortgage Network, Inc. states is even harder to meet. In addition, March was an all-time record for retail fundings for the company. Here’s why:

****“We are proud to say that we have averaged over 98% customer satisfaction since we began officially surveying our customers on every loan. Surpassing 99% was our stated goal for 2012 and we are especially proud to have achieved this success while establishing new production goals,” said EVP of Production Brian Koss. “Compared to our larger competitors, who measure their processing time in months, we are proud to say we averaged 39 days to close in March, which clearly had an impact on our strong ratings.”

****Mortgage Network, Inc. has opened 5 new offices in the past year and added many industry veterans who have built their business on personal referrals and professional recommendations. These surveys support the belief that quality local financial experts supported by passionate, service oriented processing teams are truly best to serve the customer in any market.

****“Our goal is to be the pre-eminent mortgage lender in our markets and in the eyes of our employees, clients, peers and business partners,” said Koss. “We are committed to providing the highest level of service and expertise, which consistently exceeds everyone’s expectations.”

**FIPCO Interfaces With Data-Vision**

***Data-Vision, Inc., a provider of Internet lending technologies that enable mortgage lenders to quickly and affordably implement innovative web portal and e-lending capabilities, announced that they have entered into a DU3.2 interface agreement with Financial Institution Products Corporation (FIPCO) A wholly owned subsidiary of the Wisconsin Bankers Association, FIPCO is widely regarded as a leader in financial services form sets, loan and deposit software and document imaging.

****Data-Vision President, Randy Schmidt, stated, “We are honored to be working with FIPCO. We welcome the opportunity to bring our industry leading online lending tools to FIPCO’s client base.”

****As the mortgage market evolves and borrowers demand more online lending tools from their lender, Data-Vision has a proven track record of delivering innovative products and services to the hundreds of financial institutions that it serves. They understand that being able to deliver a consistent borrower experience across all lending channels through a dynamic single online lending platform improves customer satisfaction in the most cost effective manner.

****FIPCO President, Pamela Kelly, stated, “We are pleased to offer the DU3.2 interface to Data Vision customers.  This interface will seamlessly integrate data from Data Vision into Financial Link^® software, providing users with direct and timely access to accurate information, while virtually eliminating the potential for costly errors that can often result from duplicate data entry.”

**By Ted Hicks**

***Everyone is talking about the latest iPad. Is it cool? Yes. Is it a technological advance? Yes. Is mobile computing here to stay? Yes. But can this technology really help lenders in the mortgage market today? I can see the practical application for iPads, for sure. I think tablets could be the future of mobile technology. The one issue is content creation. However, for reviewing or viewing content, tablets are what you need. Here’s how mobile will reshape origination in the years to come:

****First, as mortgage applicants grow up in the tablet world, you will see people craft ways to build content on the tablet. However, laptops didn’t kill off the computer, neither will tablets. Nonetheless, if you want to enter basic data like contact info, loan data, etc., you can and should do that on a tablet.

****Second, the iPad can be used as a way to enhance both communication and visibility into the organization. You can look to have a mobile app that allows you to interact with your LOs. It’s one thing to use a Web-based interface, but when you think about it, users don’t want to go to the Web, they want a physical application.

****Why? The application was developed by the vendor that they use regularly and it’s familiar to them. As advanced as HTML 5 is for web-based interfaces, it still lacks the functional flexibility of a real mobile application.  The reality of a web-based interface is decidedly clunky when compared to traditional applications.  What you see right now is a lot of adoption around smart phones because of mobile applications. More people have turned to mobile apps on a tablet or a smart phone for use on the go.

****However, over time tablets won’t just be for people on the go. Everyone will be using them for everything. I have three product managers that have iPads and they bring them to meetings to type notes. As that type of behavior becomes more common, there is little that apps can’t do.

****For example, we already see an appetite for apps from our clients to use our technology to process loans in their pipeline.  So then we would expect the consumer to be able to use mobile technology to initiate the loan request. You’ll see apps for smart phones in particular start popping up in the mortgage space this year and soon afterward, apps for iPads will appear. The bottom line is that the technology is out there and there is demand for it that is only going to grow. Technology vendors have to satisfy that demand.

**DRI Launches New Cloud Solution**

***Default management software, DRI Management Systems has announced that its award-winning DRI Office is now available as Software as a Service (SaaS) through cloud computing. Users of DRI Office are able to access the platform over the Internet while the software and data are securely hosted on servers at a top-tier data center. Servicers benefit from the same or better service levels and performance than if the software programs were installed locally on end-user computers.

****“Small servicers today need the tools that larger players have,” said Fred Melgaard, executive vice president and COO at DRI Management Systems. “These include compliance tools; total staff coordination; a system that provides complete accountability; straight-through processing of all expenses all the way to the claim; system flexibility; and automation of manual processes.” Melgaard cites improvements in cloud delivery technology that enable DRI’s traditionally high standards for process flexibility and delivery to be realized using this convenient and cost-effective approach. “Every size and type of loan servicer today faces the same compliance and auditing challenges,” he says. “DRI Office keeps servicers ahead of compliance demands and arms them with a complete audit record automatically.”

****Using DRI in the Cloud, mortgage servicers are able to get their applications up and running faster, with easier manageability and practically zero maintenance. DRI Office in the Cloud frees IT professionals to focus on other mission-critical areas instead of maintaining local DRI Office host servers. There is no need for capital expenditures on hosting servers and infrastructure, equipment that only depreciates and becomes obsolete over time.

****“DRI Office in the Cloud results in rapid deployment, low start-up costs, scalability, broad network access, and measured service,” Melgaard added.

****A base fee provides the platform and a fixed amount of storage and/or computations, and thereafter pricing varies with usage. “Cloud services are proving to be a valuable approach for companies wanting to make their costs as variable as possible,” Melgaard says. “Servicers need every advantage when dealing with defaulting loans, and that includes watching the bottom line. We are constantly improving the functionality of DRI Office while leveraging cloud technology to provide flexibility and unprecedented client control over vital default management processes.”

**By Chuck Rumfola**

***Mortgage loan fraud has always existed in the housing industry.  Unfortunately, many have either perpetrated mortgage fraud or fallen victim to it. This has happened in all economic cycles.  According to The Treasury Department’s Financial Crime Enforcement Network (FinCEN), instances of mortgage loan fraud spiked from 9,539 cases in 2001 to 93,564 in 2011. Given the prevailing need for awareness the industry is taking steps to combat fraud early on in the loan lifecycle. The industry must continue to fight this threat using a variety of increasingly sophisticated intelligence and tools that are more readily available to industry professionals than ever before.

****The Risk Takers

****There are many risk takers in the mortgage finance system that ultimately bears the weight of a fraudulent scheme. Credit guarantors play a critical role in uncovering fraud by having access to important loan data. Historically, loan-level data had not been leveraged by credit guarantors until long after the loan had gone bad. Discovering misrepresentations in the valuation for the first time at this stage is of little to no help – the damage is done. As we have seen, the absence of proper risk management has resulted in higher default rates that have left the taxpayer with a significant bill. Given this, the mortgage industry is moving toward a process where loan-level data will be used and analyzed during the loan manufacturing process, well before the loan closes and funds change hands.

****Fraud Solutions

****Electronic appraisal delivery initiatives and appraisal scoring are two solutions that can be used to help detect fraud in its early stages.

****Mortgage originators are using automated appraisal scoring tools to immediately review and evaluate appraisal data. This enables the originators to manage the collateral risk prior to the loan closing. These automated tools provide lenders with more confidence in their lending process as well as minimize the repurchase risk down the road.

****Similarly, the electronic appraisal delivery initiatives, mainly used by secondary market participants Fannie Mae and Freddie Mac, require appraisals to be delivered in MISMO-compliant electronic format during the loan manufacturing process and prior to the loan delivery. These agencies have positioned themselves to check, analyze and evaluate appraisals electronically in order to identify appraisal-related mortgage repurchase candidates before the mortgages are securitized.

****Combating mortgage fraud will continue to be a challenge for all industry professionals. There must be an effort by all to stop fraud through the use of sound and reliable tools and data. While this column spoke at a high level of early detection of lending fraud, the topic clearly warrants a deeper dialogue.  Be an active part of this discussion at the 2012 Predictive Methods Conference June 4-6 in Southern California and hear other industry experts present their ideas and vision for collateral risk management.

**By Michael Hammond**

***I can tell you that the PROGRESS in Lending Innovations Ceremony was a true testament to how this space is responding to real problems. I’ve been involved with PROGRESS in Lending and its Innovations Program since its inception. It’s a great honor for me to act as one of the six industry judges behind this competition. I look forward to reading the applications each year. Why? Because each application shows that innovation is alive and well in the mortgage space. And judging by the fact that over 100 prominent mortgage executives gathered at the Innovations Awards Ceremony proves to me that the industry agrees with me when I say that we need to recognize innovators and do our part to encourage future innovation. So, on this topic I want to share with you one way that I feel you can innovate when it comes to crafting the best B2B marketing strategy. Here’s my take:

****Did you know that 61 percent of U.S. marketers use social media to increase their lead generation? I bet you didn’t. Are you using this technology to innovate when it comes to crafting your own marketing strategy? If not, you should.

****According to an article called “How Social is B2B” By Shea Bennett, while the business to consumer (B2C) side of social media is both proven and well established, business to business (B2B) social marketing has been a harder sell. But the effort is paying off. A recent Business.com study showed that 55 percent of B2B survey respondents search for information using social media, and IBM reported an incredible 400 percent increase in sales in a single quarter after implementing a pilot program of social selling.

****Some 53 percent of B2B companies actively use Twitter in their marketing efforts, but this is dwarfed by Facebook (90 percent), which generates about twice as many monthly leads overall. However, and as you might expect, it’s LinkedIn that rules the roost – while less than half of businesses actively use the platform, LinkedIn returns more leads than Facebook, Twitter or blogging for B2B marketers.

****Sometimes a picture says it all. Check this out:

****(Source: Inside View. B2B image via Shutterstock.)

**Xerox Looks To Compliance Experts**

***Got compliance on your mind? Most lenders do. It’s a tough market from a regulatory standpoint and it’s going to get tougher. That’s why proactive vendors are stepping up to provide education and technology to help lenders keep compliant. Along these lines, Xerox Mortgage Services has some big plans. Here’s the scoop:

****MRG Document Technologies, a document preparation software and compliance technology, and Georgia-based Xerox Mortgage Services are combining their experience and expertise for an educational webinar that will provide lenders valuable insight into the ever changing regulatory challenges facing the market, and innovative approaches to overcoming them.

****Doing “business as usual” is no longer the answer for lenders who are looking to effectively deal with extremely complex regulatory requirements. The time to move the industry forward is now. Many lenders are unsure of how these changes will affect their business and what steps they need to take. To that end, they are turning to technology to support compliance and eliminate risks.

****The “Supporting Compliance Throughout the Loan Lifecycle” webinar, which will take place on Tuesday, May 15, 2012, at 1:30 pm EDT, will highlight the current state of the regulatory environment and what integrated partners are doing to assist the lending community. Discussion will focus on the importance of change and collaboration and how current rules and regulations are impacting lending.

****“The benefit of this collaborative, educational webinar is to assure the marketplace that their concerns are being heard and addressed by the vendor community – action is being taken,” said Kathleen Mantych, senior marketing director, MRG Document Technologies. “In this session, we’ll provide lenders with a “real world” view on the industry landscape and how collaboration between vendors combats the risk of non-compliance, state audits and potentially dramatic fines.”

****“Lenders can better support compliance when they have easier access to their data. Solutions such as MRG Document Technologies’ dynamic forms help lenders quickly adapt to new regulations and work more accurately as a result,” said Nancy Alley, vice president and general manager, Xerox Mortgage Services. “This webinar is an example of the benefit lenders gain from the BlitzDocs network, which consists of industry leading companies who have extensive expertise in their respective specialties.”

****MRG Document Technologies current collaboration with Xerox Mortgage Services enables their dynamic forms to be seamlessly passed into BlitzDocs for intelligent collaboration.

****Also, Medallion Analytics, a mortgage technology company that provides compliance and control across the entire loan origination process, announced that its Medallion QC Audit solution is now integrated with Xerox Mortgage Services’ BlitzDocs intelligent collaborative network.

****BlitzDocs simplifies and accelerates the loan process by connecting participants so they can electronically collaborate. By adding Medallion’s QC Audit tool, BlitzDocs users will benefit from an automated quality control check, including a complete audit report within minutes – eliminating the need for manual review of each element and cutting loan processing time even further.

****“The combined capabilities of Medallion’s and Xerox Mortgage Services’ technologies demonstrate the power of next generation paperless mortgage processing, driving down cost and processing time, while dramatically enhancing quality and compliance,” said Joel Davidson, CEO of Medallion Analytics. “With Medallion’s unique ability to extract and analyze content from mortgage documents and convert it into usable data, not just images, Medallion gives loan originators a breakthrough solution to automate the entire pre- and post-close loan origination audit process.”

****Using Medallion’s technology, lenders can spot data integrity and compliance issues in real time, eliminating costly errors of manual review, while embracing evolving regulatory requirements — enabling loans to be processed dramatically faster for borrowers.

****“In today’s stringent environment, lenders need faster, easier ways to maintain accuracy and transparency of the data,” said Nancy Alley, vice president and general manager, Xerox Mortgage Services. “With the addition of Medallion QC Audit, Xerox Mortgage Services continues to improve the paperless mortgage process and provide additional compliance safeguards to our BlitzDocs users.”

**The IRS Steps Up, Finally**

***The big news recently is that the IRS is about to accept electronic signatures on the 4506-T. Certainly, getting rid of this barrier to adopting e-signatures will be huge. The IRS initiatives, while benefiting the industry, also are expected to meet with public acceptance. A recent PEW Internet & American Life Project report indicates that more than two-thirds of adults feel it is important to complete government-related tasks online. The study, released on April 12, 2012, is available at www.PewInternet.org. But is the industry read to start e-signing right away? Here’s the scoop:

****First, National Credit-reporting System, Inc., a full-service consumer reporting agency specializing in income, identity and credit intelligence, is assisting the IRS in the development of its e-Signature and e-Transcripts initiatives, creating an electronic process that eliminates the need for the paper form 4506-T when requesting IRS tax transcripts. The IRS initiatives are part of NCS’ drive to provide lenders with new verification solutions that lower origination costs and speed loan closings.

****Cecil Bowman, senior vice president for government and industry relations at NCS, chaired the MBA committee on IRS 4506-T issues that is working with the IRS to create an electronic version of the 4506-T form. The form is used to request tax return data to verify borrower income, employment and finances. The e-Signature initiative has completed its Proof of Concept trials, and e-Transcripts will begin its Proof of Concept later this year.

****“We’ve moved the industry in the past 12 months to a position where the IRS is going to be able to go with an e-Signature capability on form 4506-T and get rid of the wet signature requirement,” said Bowman. “We also helped drive development of the end-to-end electronic capability that will provide income verification through e-Transcripts, not in days, but in minutes.”

****NCS is also continuing to enhance its proprietary internal software to provide greater decisioning and analysis capabilities for its clients. These enhancements are centered on parsing the data contained in the HTML formatted IRS transcripts. They also include incorporating additional data sources into new reports NCS is currently developing. NCS’ enhanced data parsing application provides customizable cash flow analysis and sort capabilities available in many delivery and format options, such as web services and XML.

****And vendors are ready. The desire to be able to e-sign is there. For example, DocMagic recently announced that it is fully prepared to provide electronic signatures under the IRS Income Verification Express Service, which will allow lenders in the future to use e-signatures on official requests for a borrower’s tax transcripts and thus streamline the mortgage origination process.

****According to the Mortgage Bankers Association, the Federal Housing Administration and the U.S. Internal Revenue Service will start allowing electronic signatures on the IRS 4506-T tax transcript request forms and on FHA loan documents sometime this year. The development is seen as an important step in streamlining loan approvals, as the current process of verifying a borrower’s income and financial profile can take days or even weeks. DocMagic has been working with some of the nation’s largest lenders, credit unions and service providers to prepare for the adoption of this milestone.

****DocMagic currently enables the electronic signing of loan documents and disclosures through its eSign solution. A vital part of eSign is DocMagic’s proprietary ClickSign technology, which digitally seals a borrower’s signature on key loan documents. DocMagic’s eSign platform, available to anyone who wants to create e-signatures at no cost, is fully compliant with both the eSIGN Act and the federal Uniform Electronic Transactions Act (UETA).

****Dominic Iannitti, president and CEO of DocMagic, said, “With electronic signatures, our clients and partners can increase the speed and efficiency of their operations, particularly on non-disclosure agreements, pre-disclosures and legal contracts.  When e-signatures are approved for 4506-T forms, we’ll be ready to go – and our clients will see even greater savings in time and paper.”

****But will lenders look to e-sign everything? Chuck Burke, chief operating officer of NCS, said, “As the popularity of customization of IRS data grows, NCS has correspondingly worked with the IRS to encourage and provide assistance for shrinking IRS turn times for the benefit of NCS and our industry as a whole. Every company in the industry depends on the IRS’ response.”

**True Innovators Recognized**

***Over 100 executives gathered to honor the top innovations. It was an event to remember. In the face of adversity the mortgage industry responded. Several new innovations arose to help aide the industry in its efforts to get closer to recovery. And that’s really what the Innovations Program is all about. We are the Good Housekeeping Seal of Approval, the Gold Seal when it comes to recognizing true mortgage industry innovation.

****What were we looking for specifically? We are recognizing innovations that were introduced into the mortgage market between January of 2011 and December of 2011 that truly changed the mortgage market for the better. Understand that this is not a subjective competition. All applications were scored on a weighted scale. We looked for the innovation’s overall industry significance, the originality of the innovation, the positive change the innovation made possible, the intangible efficiencies gained as a result of the innovation, and the hard cost and time savings that the innovation enables industry participants to achieve.

****Also understand that this recognition was not decided by mere industry onlookers, all six industry experts that make up the PROGRESS in Lending Association Executive Team acted as judges and all were given an equal say in how applications were evaluated. In short, the winners were judged by industry peers who know the space inside and out, just like you do.

****We encourage you to apply online to get recognized for your efforts this year HERE. But for now, in alphabetical order, the top innovations of 2011 are:

****a la mode, inc.

****The rapidly changing regulatory landscape and the new GSE requirements significantly impacted the appraisal management and collateral valuation industries in 2011. Without critical innovation, delivery difficulties of the newly required MISMO 2.6 appraisal data could have choked origination pipelines at a time when this industry can least afford it. Since a la mode’s appraisal formfilling software is the choice of well over half the appraisers in the country, the company already had a presence on the desktop of a majority of the nation’s appraisers. That presence gave Mercury Network the unique opportunity to innovate a solution that streamlines the delivery of compliant appraisal data and ensures the easiest possible transition for all lenders and AMCs to easily comply with the GSEs new Uniform Collateral Data Platform (UCDP). In September of 2011, a la mode’s Mercury Network launched DataCourier, a new service that allows appraisers to easily deliver the MISMO XML to any lender or AMC they work for, without any manual file conversions or non-compliant e-mail attachments.

****DecisionReady

****In 2011, DecisionReady tackled a tough industry problem—default mortgage servicing—head-on, and came up with a technology solution that has already had far-reaching effects. The challenge of how to manage the business of servicing defaulted and delinquent loans in an efficient, cost-effective, and, most importantly, compliant manner, is one faced by nearly all of today’s mortgage servicers. By combining up-to-the-minute technology with a shrewd business strategy, DecisionReady came out with a solution that delivers major advancements in the business of managing defaulted loans, while ensuring the servicing of those loans is compliant. The solution created by DecisionReady addresses the full range of issues faced by today’s servicers. The DRAW platform helps servicers reduce costs, improve accuracy, and reduce the compliance risk associated with servicing delinquent loans.

****Five Brothers

****Over the past couple of years we have experienced serve economic challenges. High unemployment rates, an epidemic of foreclosures and defaults, declining home prices and an economy that is struggling to get back on track.  This has been difficult on everyone, including municipalities. To combat this situation municipalities have turned to implementing a wave of new regulations, and municipal codes requiring strict vacant property registration.  Each municipality across the country has added their own requirements and penalties for not adhering to these strict vacant property requirements. Resulting in fines and fees for non-compliance. To provide an effective and powerful tool, Five Brothers Default Management solutions has applied over 40 years of default management expertise, deep knowledge and working experience with municipalities, and advanced technology to deliver the industry an innovative vacant property registration solution. This Web-based system leverages the most advanced vacant property registration database to deliver 24/7 solutions to servicers to ease their burden of handling vacant property registration.

****GreenBar America

****Mortgage technology is advancing but really nothing innovative has been created to change the consumer experience at the point-of-sale. That’s where GreenBar comes in. The GreenBar solution addresses the intent of the Consumer Financial Protection Bureau as it pertains to the mortgage transaction; it endeavors to eliminate intentional and unintentional product steering by mortgage originators; it provides the mortgage industry with a more effective, comprehensive, realistic and consumer centric definition and solution for adhering to intent of the “safe harbor” provisions; it protects consumers against loan originator bias (intentional and unintentional), as pertains to the selection or recommendation of a specific mortgage product and terms; it establishes a simple, easy to understand and universally accepted framework for evaluating the borrower’s ability-to-pay; it puts consumer needs as the starting point of the mortgage transaction; and it incorporates a standardized educational method into the origination process. To elaborate, the GreenBar Decision Engine enables mortgage borrowers to be “pre” underwritten by loan originators for the purpose of educating consumers as to the optimal product and strategy to maximize the likelihood that they will be able to meet their new long-term financial obligation.

****LoanSifter

****The LoanSifter Available Mortgage Rate Index (AMRi) is the mortgage industry’s first complete, real-time mortgage rate index that is based on same-day rates and the only index that provides a realistic idea of what borrowers typically pay for a loan. Three main characteristics set LoanSifter AMRi apart. First, it provides the most accurate depiction of current and historical mortgage rates available on the market. It is the only index based on same-day rates. Rather than using past sources of information, the LoanSifter AMRi’s indices are created by leveraging real-time data from 25 wholesale and correspondent lenders. Second, the LoanSifter AMRi was created in partnership with the Federal Reserve Bank of Boston, one of twelve district Reserve Banks in the Federal Reserve System. Third, use of the LoanSifter AMRi is completely free of charge. The LoanSifter AMRi lists all relevant rate information all on a single page.

****MortgageFlex

****Recognizing that the lending industry would never be the same after the last industry down time and lenders would need smarter and more efficient solutions, MortgageFlex developed an offering that isn’t just new technology but a new solutions approach. One that addresses everything a lender needs to respond quickly and easily to the ever-changing rules and regulations and the demands of tech savvy borrowers while continuing to increase revenue. Traditionally, technology vendors simply upgrade to the latest platform (DOS > Windows > .NET) and tout the advantages. And while the latest advantages are numerous, there still needed to be a support solution paradigm shift to accommodate the lending transformation that has occurred. Just upgrading technology is not enough to be successful anymore; lenders need flexible pricing options, secure hosting choices and experienced resources. In short, they need a strong partner with new answers. To meet these needs, MortgageFlex redesigned not only the LoanQuest product offering but looked internally and evaluated their resources and processes.

****Sperlonga Data & Analytics

****The past few years have revealed a growing problem faced by mortgage servicers: delinquent homeowners association (HOA) fees causing delays in reselling foreclosed and defaulted residential properties. It has been said that this is “the biggest problem the mortgage industry has never heard of,” and it affects, in one way or another, over 24 million properties. Enter Matt Martin and team with a simple, yet ingenious, solution; find every HOA out there and bridge the gap between them and the mortgage servicer and investor community. Martin’s concept was the genesis of Sperlonga Data and Analytics, an Arlington, VA-based company created in 2011 to provide a technology-enabled centralized interface for HOAs and servicers, as well as an array of services to benefit both sides. Sperlonga’s technology facilitates the identification, delivery, and resolution of outstanding account balances related to association fees. Servicers and investors upload portfolios of properties directly into the Sperlonga workflow engine, and progress and results are viewable through a personalized Client Dashboard. This simplifies the overall process.

**By Tony Garritano**

***There has certainly been a lot of talk about Software as a Service (SaaS). I remember the days when many disputed the future validity of any Web-based approach. They said that lenders would never go along with it. Critics cited security reasons as the biggest hurdle. However, security around Web-based applications has improved and more and more vendors are moving to offer SaaS products.

****For example, origination vendor Ellie Mae reported results for the fourth quarter and fiscal year ended December 31, 2011 and spoke very highly of how important SaaS has become to their company’s financial viability. Total revenue for the fourth quarter of 2011 increased 48% to $18.8 million, compared to $12.7 million in the fourth quarter of 2010 at Ellie Mae. Net income for the fourth quarter of 2011 was $1.8 million, or $0.08 per diluted share, compared to net income of $1.9 million, or $0.11 per diluted share, in the fourth quarter of 2010.

****Why are the numbers so positive? Ellie Mae says SaaS has a lot to do with it. The number of lender users actively using the company’s Encompass enterprise solution (“active lender users”) increased 17% year over year to 46,238. Of all active lender users, 23,319 or 50%, were using the SaaS version of Encompass, an increase of 74% year over year. In total, 5,540 SaaS success-based pricing (SBP) seat licenses were sold, or booked, during the quarter, including 1,690 new seat licenses and 3,850 conversions of existing licensed Encompass and Datatrac users to the SBP model.

****In talking about this trend, Sig Anderman, President and CEO of Ellie Mae, said, “Our 2011 financial performance reflects strong momentum for our on-demand offerings, which accounted for 86% of total 2011 revenue. Growth continued to be fueled by our popular success-based pricing solution, with over 18,000 SBP seat licenses sold during the year, an increase of 57% from 2010. The number of active SBP users doubled in 2011, to over 19,000.

**** “This SaaS, end-to-end solution is increasingly resonating with lenders, as it enables them to streamline and automate the mortgage origination process and address the proliferating regulatory challenges and investor demands for quality and efficiency,” he continued. “By offering this comprehensive suite of services on demand with an attractive pricing and risk proposition, it enables our customers to focus on the business of originating loans, rather than technology infrastructure, with Ellie Mae as their aligned technology partner.”

****Realizing the strength of SaaS, Ellie Mae recently announced that Cathleen Schreiner Gates has joined the company as its senior vice president (SVP) of sales and client services. In this role, Ms. Schreiner Gates is responsible for all client-facing activities, including new client acquisition, implementation, training, client services, on-going account management and client care. She reports to Jonathan Corr, chief operating officer (COO) of Ellie Mae.

****Ms. Schreiner Gates joins Ellie Mae with more than 25 years of experience, working in marketing, sales and field operations with various companies, including start-ups and high-growth companies, where she helped them transition into successful software as a service (SaaS) providers. Most recently, she was SVP of sales and client services at Bersin & Associates, LLC, Oakland, CA, a global provider of research, tools and advisory services in talent management, corporate learning, leadership development, talent acquisition and human resources.

****Over the course of her career, Ms. Schreiner Gates has held executive management and senior sales positions at Clickability, MarketTools, Keynote Systems, SiteROCK and NinthHouse Network. Most notably, she spent more than 10 years at Hyperion Solutions, a business-performance-management software company acquired by Oracle in 2007. In her role as VP of sales, she helped the company grow its revenues from $10M to $500M. During her tenure, Hyperion went public, acquired four companies and moved into several new markets.

****But why was she really brought on board at Ellie Mae? “Ellie Mae’s business model is rapidly shifting from an enterprise software to SaaS,” said Corr. “Cathleen’s experience at Hyperion is exactly what we were looking for. Not only is she a proven sales leader, but she is also someone who understands the complete client experience and can help us maximize client satisfaction as a SaaS provider.”

****As we all know Ellie Mae caters to small and midtier lenders. These lenders are satisfied with out-of-the-box solutions, but what about the larger lenders, will they gravitate to SaaS? To answer this question I went to Mortgage Cadence, an origination vendor that touts having many larger lender clients. Rob Jannotte, EVP of Product Management at Mortgage Cadence, said that he, like Ellie Mae, believes that SaaS is here to stay.

**** “As margins continue to shrink due to the erosion of available product options in the mortgage industry, lenders must find ways to leverage economies of scale, drive down operating costs, and reduce overall maintenance costs,” he noted. “Lenders only need to look to the ‘clouds’ for a solution. With all the benefits that cloud computing has to offer, it is a no-brainer for survivors in the mortgage lending space to utilize cloud-based SaaS technology solutions. SaaS offerings provide fast, inexpensive, and very stable services that decrease implementation times and allow faster realization of ROI. While lenders may face some of the hardest times they have experienced in the last 20 years, cloud-based SaaS computing solutions will provide opportunities for cost savings, decreased implementation times, and operational efficiencies like never before, getting clients to ROI exponentially faster.”

****As they say though, the proof is in the pudding. Are lenders willing to come out and tout SaaS as something that swayed them toward making a given technology decision? In fact, many are. For example, Independence Mortgage Company’s 2011 restructuring plan included moving to a cloud-based server, using Microsoft Office 365 and equipping its sales team with iPads for work on the go. Avista Solutions’ cloud-based, all-in-one format fit the company’s new business profile, provided much-needed data security and freed its IT department from cost and resource burdens, Wickham said.

****“My big push for Avista was that it complements my IT objective for the group globally,” Independence Mortgage Company Director Jim Wickham, a Certified Mortgage Banker, said. “It’s secure, has a central source of maintenance, offers remote access and is not device specific. We’re moving to Microsoft Office 365 and the cloud-based server for our business unit, and when we complement that application with Avista’s Web-based format, we achieve our goals.”

****Wickham cites ImageFlow, Avista’s fully integrated, electronic document management solution, DataMart, Avista’s onsite data storage and reporting tool, and the system’s workflow queues, which allow for loan life tracking and department performance accountability, as key system features that won his company over.

****So, what’s the long-term takeaway of the future of SaaS in the mortgage space? A popular technology blog called “Inspirations” put it this way:

****The use of Cloud computing provided immediate and long lasting benefits to Internet companies. They were able to scale up and scale down server resources much faster without worrying about the underlying hardware. A Virtual server normally uses resources of multiple underlying physical servers. So in case one particular physical hardware is down, the Virtual server can quickly switch over and use resources of other physical server. This allowed for 100% availability and almost zero down time.

****With the growth of cloud computing, using software over the Internet became more reliable, fast and secure. A lot of innovative companies started serving up Web applications by using cloud-based servers. Companies like Amazon.com now provide their own cloud computing infrastructure to individuals and business through their service offerings such as Amazon EC2, Amazon S3 and Amazon DB2. These services are very cheap and highly scalable, allowing even a small business to scale and grow their web application rapidly.

****By using Cloud computing, many companies are now offeringSaaS over the Web. Salesforce.com is one such company which pioneered the use of serving software over the Web. Salesforce.com’s flagship on-demand CRM (Customer Relationship Management) is now used by millions of people across the globe. Its annual revenues are to the tune of $1.27 billion in 2010. The growth of companies like Salesforice.com signifies the growing popularity of SaaS, which was the result of innovation in cloud computing.

****I think “Inspirations” has it right. SaaS is here to say.

****ABOUT THE AUTHOR:
****Tony Garritano is Chairman and Founder of PROGRESS in Lending. 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. He can be reached via e-mail at tony@progressinlending.com.

**Executive Interview**

***When you talk about the loan origination space, you would be remiss if you leave out the market share leader Calyx Software. Calyx has maintained its market share dominance through the years and has continually looked to improve its Point offering to better the mortgage process. Now Calyx Software is going even further this year with the launch of LoanScoreCard, mobile applications and a new LOS designed from the ground up with compliance in mind. Dennis Boggs, the EVP of Business Development at Calyx Software, talked to us about his past and the future of Calyx Software and the LOS space. Here’s his candid thoughts:

****Q: You’ve been in the mortgage space for over 20 years. Why have you decided to make this your career?

****DENNIS BOGGS: I came to California in 1990. I was looking around for something to do and I came across a company called Daily Mortgage Facts. This company published a book that had all the wholesale lenders in that book with their products and guidelines. It was a paper version of a product and pricing engine, really. The book was published monthly and they also created a software product to supplement the book. The software was built using a FoxPro database and I went around selling it and installing it in broker shops. It failed as a company because brokers didn’t want to pay and we couldn’t get all the lenders on the system. It was too early, but this is what the product and pricing services are offering today 20 years later. That’s how I got into this industry.

****From there, I disengaged from that company and set myself up as a reseller that sold different software to the various brokers that I had met. During that time I accidentally met Doug Chang. I wanted to install the software from Daily Mortgage Facts onto a client’s system but I couldn’t get passed their network security. They told me to call Doug to help me type in my DOS command, because this was all pre-Windows, so I could install my software. Myself and Doug swapped cards and he called me six months later to help him sell a new product that he created. He had six clients at the time. Doug asked me if we could ever sell into 1,000 clients, well we peaked at over 40,000 clients.

****So, I learned everything I know about mortgage by interacting with mortgage companies and I learned everything I know about technology from being inside a technology company.

****Q: How has the mortgage business and the technology business changed since you first started out?

****DENNIS BOGGS: It’s scary to think that so much time has passed. When I started, offices had what they thought was this super-great technology called an IBM Selectric typewriter. They also had an NCR three—part loan app that they would shove in and type. If you typed anything wrong you had to rip out your carbon copy and type it again. The other advance at that time was that laser printers were starting to come out. The idea of programming the form that could be printed on a plain piece of paper and have your data entry stuff on your screen so you could back up and make changes, was considered just revolutionary. The idea of not retyping data was also revolutionary. If you needed to type the loan amount in four different places you used to have to retype and you could have different loan amounts if you made a mistake. So, the idea of typing the loan amount once and having the software put it wherever it needed to go was also revolutionary back then. That’s where Calyx Software started.

****We were replacing the form in those days. So, we represented the form in the software so when you were typing into the system you were seeing what looked like the form on your screen. That created a lot of value and a lot of challenges. If we’re talking about how the business has changed, we started by replacing the typewriter. From there, we added things like FHA, prequalification, and just more and more features. The next revolution was integration to vendors because that did not exist prior. The efficiencies of saving time and not having to retype data were huge. You wanted to have the right data just populating into your software from the source. Now the LOS was switching from just being a form generator to being a central hub for data transactions and collection.

****That went along and continues to evolve. As time went on, Calyx became so dominant in the mortgage market. The broker base started when we started Calyx, so they really grew up on Calyx Point. Now the big issue is compliance. The question now becomes if representing the data in a form is the best way. So, before the meltdown we launched Point Central. Now we have the ability to centralized data in an Internet-based software. It is Internet-based in that you can get to the data through the Internet, but that data is still securely stored in a central location. We didn’t want to create something where data resides on individual computers because if they’re stolen there goes all this sensitive data. That product has evolved to include rules, a whole document management system, and you can create rules to create compliant documents.

****The next step is questioning if the best way to organize a software is around emulating the form because the mortgage process is no longer linear. What do I mean? Something can happen in the process simultaneously that knocks you out of compliance. We can overlay rules over the system to put in hard stops that enforce compliance. Now we’re rethinking this. We’re asking: Is it about forms? Is it about tasks? Is it about workflow? We’re taking all this into account as we launch our newest LOS this year.

****Q: Let’s continue that thought. How do you think lenders and vendors are handling compliance?

****DENNIS BOGGS: If you layer a rules engine over your software you can sort of make it work. A lot of training is involved, but we question if taking that old software and continually connecting new things into it to make it work in a new world is the right approach or is a better approach to start over and remake the software based on this new world. That’s the question. Your software has to be about compliance and how the different parties interact and communicate. You need to design compliance from the ground up. We’re all trying to achieve the same thing. We want to create a compliant loan package. However, every mortgage banker goes about that in a different way. Calyx Software is not a custom software house. Custom software costs millions of dollars. Our strategy is such that we are looking to create software designed around compliance that is extremely configurable.

****Q: In terms of Calyx Software news, you acquired Loan-Score Decisioning last year. How has that acquisition shaped Calyx now?

****DENNIS BOGGS: Loan-Score has a pricer that is the equivalent of a NYLX, Optimal Blue, LoanSifter, etc. It also has an underwriting engine. Pricers are all about eligibility and pricing. They take 15 to 20 data elements and run them against an engine to give you a sense of what products the borrower is eligible for. From there the secondary department works to overlay specific products and guidelines. The problem with pricers is they don’t take into account these investor overlays and you may have a loan that you can’t sell to the investor that your pricer matched you up with. Loan-Score offers a full underwriting engine on top of the pricing capability so you don’t go down a road with a loan that you can’t sell. If you don’t have an investor, you shouldn’t waste time on that loan. We embed Loan-Score into Calyx Point so you get direct integration. If you are not using Calyx Point you can also use Loan-Score with another LOS. Also, Loan-Score was the first non-investor AUS to integrate to FHA. What does that mean? You can get an FHA TOTAL Scorecard decision without the lender having to go through Fannie Mae.

****Q: Last question, what is the future of the LOS space as you see it?

****DENNIS BOGGS: I don’t think I’m saying anything new or revolutionary when I say that end-to-end solutions are clearly what people want. Lenders want to deal with less vendors. They want one system. The less cobbled together the system is, the better. The danger for vendors is that they will be cut out of the process if they are not tightly integrated or are an actual part of the LOS.

****INDUSTRY PREDICTIONS:

****Dennis Boggs thinks:

****1. LOS vendors will keep moving in the direction of providing End-to-End solutions.

****2. Compliance issues will ratchet up and continue to be a major factor in technology choices.

****3. The TPO channel will not die and will see new players emerging as top lenders in this space.

****INSIDER PROFILE:

****Dennis Boggs is the EVP of Business Development at Calyx Software. Boggs has 22 years of experience in the mortgage industry and has been an instrumental part of Calyx since 1991. Dennis first joined Calyx when there were only 6 customers, serving as an independent sales representative and marketing partner. Through his early efforts, Dennis was largely responsible for building the user base and market share that Calyx still enjoys today. More recently, as an active member of the Executive Director team, he has been instrumental in the progression and evolution of the Calyx product lines throughout the years and plays a key role in forging our business relationships. Dennis played a critical role in bringing Loan-Score to Calyx and has helped in the development and roll-out of the new Calyx Decisioning System product line. He is currently leading the outside sales team and is responsible for all new account sales.

**By Kathy Mantych**

***The regulatory landscape continues to change at a rapid pace especially with respect to CFPB, Dodd-Frank, and the HARP 2.0 program with FHFA – how can the industry keep up?

****Let’s face it, lending has significantly changed over the past couple of years. The pressure on today’s lenders is incredible. This lending environment creates dramatic loan document challenges and risks for lenders. Changing rules, regulations, and the ramifications of non-compliance, including fees, penalties and the possibility of buy-backs make the origination process an escalating challenge. Traditional “doc prep” is no longer the answer when lenders are trying to handle these complex and ever changing requirements.

****Most lenders, quite frankly, don’t have the time or resources to staff a compliance department that can constantly monitor and accurately interpret the vast number of regulatory changes that are being implemented on federal, state and local levels. Relying on an antiquated forms library to deliver static documents, with limited legal compliance analysts, is no longer a prudent choice, and is a risk that lenders simply cannot afford to take.

****These changes are occurring so fast that lenders can’t keep up, let alone understand and interpret every change. This exposes lenders to significant risk and penalties for costly non-compliance.

****Collaborate

****So how is the industry going to handle these challenges? What does the industry need to do to effectively respond and move forward? The first step is to come together and collaborate to address these real and critically important issues.

****We need to come together as vendors, lenders and the industry as a whole to share ideas, express concerns, create awareness, and focus on developing real world solutions. It is this cooperative spirit that will begin to move the industry forward.

****Educate

****Next, with the willingness to collaborate, we need to bring the best minds and leading experts together who understand and are constantly monitoring these regulatory changes. Organizations that not only are aware of these changes but, more importantly, understand what impact they will have on your business. Before we can solve these challenges, we must be educated as to what changes have occurred, how lending will be impacted, what it means to your business and what the cost and ramifications will be for non-compliance.

****By understanding this highly volatile regulatory lending environment we can work together to develop solutions that will mitigate risk and compliantly respond to these changes.

****Innovate

****With collaboration and the awareness created through education, it is time to introduce innovative solutions to begin to apply methods and approaches that directly address the challenges that lenders are facing. These solutions need to assist lenders in weathering the storm, to not only educate the industry about the climate, but to take the onus of turbulence out of lenders’ hands.

****Lenders are having to bolt on too many systems and platforms to their lending practices and operations to just keep their head above water. This is especially true when trying to handle today’s ever changing compliance requirements. These current market conditions demand an innovative solution that will ease this burden on lenders while delivering compliant content, paperless workflow collaboration all in one seamless solution.

****To proactively respond to these market conditions MRG Document Technologies and Xerox Mortgage Services have partnered to deliver lenders with a best-of-breed solution to navigate today’s stringent compliance regulations. Users of Xerox Mortgage Services’ BlitzDocs, an intelligent collaborative network for electronic collaboration, can now benefit from MRG Document Technologies’ dynamic document content and compliance.

****For instance, lenders can order disclosure documents in the MISMO standard file type from MRG Document Technologies. MRG Document Technologies will leverage its dynamic content capabilities to create the documents and deliver them to the BlitzDocs electronic loan folder (eFolder). Once in the BlitzDocs eFolder, users can collaborate on the documents with the industry’s disparate parties, such as borrowers, underwriters or closing agents. For an added layer of support for compliance, BlitzDocs also provides an extensive audit trail and tracking capabilities.

****MRG Document Technologies and Xerox Mortgage Services are partnering to promote collaboration and education through industry events, such as webinars. By combining MRG Document Technologies’ legal experience and in-depth knowledge of today’s regulatory environment and Xerox Mortgage Services’ expertise in electronic collaboration, lenders will gain valuable insight into the challenges facing the market and innovative approaches to overcoming them.

****Doing “business as usual” is no longer the answer for lenders who are looking to effectively deal with these extremely complex and ever changing requirements. The time to move the industry forward is now. The time to embrace change and eliminate the risk associated with all the rules and regulations is upon us.

****ABOUT THE AUTHOR:
****Kathleen Mantych is Senior Marketing Director with MRG Document Technologies, a document preparation practice group within the law firm of Middleberg, Riddle & Gianna with offices in Dallas, Texas and New Orleans, Louisiana. MRG is a provider of mortgage technologies to banks, credit unions and lending institutions nationwide. Kathleen is responsible for the strategic development of new customer and alliance partner relationships.

**By Barbara Perino and Rebecca Walzak**

***Over the past year we have written several articles about the next generations that will be joining the workforce in an effort to help lenders draw and retain new employees to their companies. However, what we haven’t discussed is what these next generations will require and/or demand when it comes to fulfilling their need for housing. Will they have the same desire to own the “American Dream” as their parents and grandparents did? Will they be content to go through the processes of application, approval and closing that have long been the “way things are done”? Or will they expect changes in the processes and the products that are offered to them?

****The potential borrowers that are now moving into the “home-buying” market are those that were born between 1960 and the 1992. They are made up of two very different generations known as Gen X and Gen Y. Each has their own approach to life, work, family and ultimately their buying power.

****Gen X

****The Gen X population, born between the early to mid 60s through the end of the 70s is one of the smallest generations; approximately 50 million in size. This generation, now is in their late thirties and forties; is starting to reach past the starter home and are looking for that family home where they want to raise their children and develop a sense of family within their community. Because these were the “latch-key” kids who grew up in single-parent households or one in which both parents had to work, they tend to approach issues from a self-reliant mentality. They also value a work/life balance and are less inclined to see working extra hours as a good idea even if means more financial strength or the ability to stretch their home-buying dollar. Their pragmatic approach to what they want and how things get done is supplemented with technological acuity. Through the use of the technologies available to them today, they can accomplish numerous everyday issues while still having time to spend with their children and extended families. For example, they can do their grocery shopping, help their kids with the homework, balance their checkbooks and implement a household budget from the living room sofa. The “smart-app” technology in use today can ensure they are remembering everything they need to as well as provide critical information as to spending habits and available funds for monthly bills.

****Gen Y

****While the Baby Boomers, all 76 million of them continue to hold the title of the largest generation, Gen Y is not far behind with 72.9 million. Born between 1980 and 1994, this generation equals about one-third of the total U.S. population and, like the Baby Boomers before them did, are leading a tidal wave in trends, buying power and ultimately company profitability. The Gen Y members are different in many ways from their Gen X counterparts. While Gen X tends to view issues and opportunities from a pragmatic perspective and an underlying concern about a favorable outcome, Gen Y is optimistic and confident in their ability to achieve what they set out to do. For example, a Gen X member will be more likely to stay in a starter-home if they are comfortable with the payment rather than take on a larger house and larger payment even if they have outgrown the house while the Gen Y member would be looking optimistically at the prospect of buying that larger home, confident that they will be able to meet those larger payments.

****Gen Y members are also more sociable but with a very well-defined sense of morality underlying it. They will not accept doing this wrong even if it is perceived at the time to be for the right purpose. While the Gen X generation is looking to develop a sense of family in their social interactions, the Gen Y members are looking to embrace social relationships around the world. This sense of sociality is supported through the technological sophistication they have grown-up with and includes all the social media outlets we have today. Yet the down side to this social outreach through technology is the need that this generation has for supervision and structure in their lives. Their ability to interact socially without the benefit of technology has been hampered and as a result they may not be as comfortable reaching out for face to face contact for guidance and assistance.

****Current Knowledge

****While this is very interesting you may say: What does it have to do with me and my company? We must face the reality that these generations, the Gen X and Gen Y populations are our new customers.

****From the time that mortgage lending emerged as a definitive industry, one that straddled the boundaries of banking and financial services, we have worked within a very specific framework. Our credit risk policies were developed by Fannie Mae, Freddie Mac and HUD as were our servicing processes. The origination process itself is predicated on the need to gather information, gather data about that information and then apply the credit policies to it. Our confidence in the application of these credit policies being the “right” ones are based on the performance of mortgage loans that have been originated from that period onward. However, we must recognize that these credit policies were developed by Baby Boomers for borrowers who were Baby Boomers. We have to ask ourselves, “Will they work for the next generation”?

****The reality is we really don’t know. While it is certain that some of the members of Gen X got caught up in the mortgage highs and lows of the past nine years, there has been no analysis done to determine if or how many were impacted; how many took on loans that had skyrocketing interest rates or false borrower information. We don’t know if these individuals were able to survive the meltdown at the same rate as the Baby Boomers or determine if they fared better or worse.

****For now the only thing we can do is to go forward with what we do know about these individuals and attempt to prepare for this population of customers in a way that meets their expectations and needs. So what do we need to do?

****Expectations

****Before we can begin to create our ability to generate customers and revenue from these individuals, we must take into account what they want, expect and need from this process. The first issue that many of these “kids” face is the fact that they are involved in an economic climate that is far from stable. For the Generation X population that may have suffered from the recent layoffs and market downturn, they will want to make sure that if they buy this house and take on this mortgage, they will be able to pay for it. This is one reason that many prognosticators say that we are going to be dealing with a generation of renters. To the X Generation renting is the most pragmatic way to assure one’s self that housing will always be available. Other members of the generation that had made home purchases prior to the housing collapse will choose to stay where they are, with the mortgage they know they can pay. They will most likely be very skeptical about a new loan program or accept that the servicing problems they suffered are now gone. On top of that, the skepticism that grew out of the mortgage meltdown will have to be overcome if this generation is to become users of mortgage credit.

****We also have to consider the “smart” technology that is available to them today, they can calculate mortgage payments themselves and use the technology to tell them what they will qualify for and what they can afford to pay. In addition, while unrelated co-borrowers that were not family members have always been accepted for second home and/or investment properties, the “sense of family” that this generation has developed within their community may result in the expectation that these members can become co-borrowers on owner occupied properties.

****Generation Y borrowers are emerging as the newest members of the home-buying public. With their optimistic attitude and confidence in their ability to meet all challenges, they will most likely want to purchase more than what our traditional ratio calculations allow. Their ability to utilize technology in a much more sophisticated manner means that they will not only pre-determine their mortgage debt but will have the wherewithal to manipulate what they can afford on a month to month basis. Many of them will be over-reaching based on what we Baby Boomers think is good for them. Furthermore with their weaker face-to-face social skills, loan officers and/or servicing CSRs will have a tougher job discussing issues and obstacles with them.

****In addition to the generational and technological aspects these generations bring to the lending process, these individuals will most likely be encumbered with a significant amount of debt. With over 4,000 college institutions in the U.S. today, the population of individuals seeking some type of higher education has never been greater. Along with this demand is also the demand to allow these costs to be financed, but instead of the $2,500 student loan debt that we graduated with, it is not uncommon for students to leave school $40,000  to $50,000 in debt. For those individuals pursuing graduate degrees it is closer to $100,000. On top of these debts, individuals are accumulating credit card debt earlier than ever before. Today, student loan debt has surpassed the total amount of credit card debt in the country but both are significantly higher than the Baby Boom generation experienced.

****“Every generation needs a new revolution.” – Thomas Jefferson

****What does all this mean? What has to change and how can we make those changes?

Like it or not, the changes have already begun. With the new regulations coming from the Dodd-Frank bill, the restructuring of Fannie Mae and Freddie Mac and the recently announced servicing settlement, the consumer is taking their place front and center in the mortgage lending industry. And there are more changes we need to make to address the additional approach to the business that encompasses every aspect of the mortgage program.

****The traditional approach to providing these individuals with mortgage options and information through a loan officer will more than likely disappear or be radically changed. Loan officers will need to compete with technology programs that can handle all the qualifications and explanations that is a big part of their value today. What they will be needed for is to support the applicants through the process either by reassuring them and/or establishing a relationship providing them with a trustworthy source of information. What this will mean to loan officer standards and pay is yet to be determined.

****Credit policies will have to change. Applicants will come to the process with the knowledge of what they want to buy and what they can afford. This knowledge will most likely come from technology applications that continuously analyze their finances and provide updates on spending patterns and cash flow. What underwriter wants to try and tell an applicant that they do not qualify for a mortgage when their financial application says they can? Ratios will have to become more personalized to account for different spending habits and cash flows; considerations of eligible borrowers will have to account for expanded definitions of family. As the definition of family changes, it is likely that housing will come to reflect that change and what we now accept as collateral will need to be redefined.

****Servicing too will need to be revamped as well. In addition to a Single Point of Contact (SPOC), servicers will have to find ways to communicate with borrower electronically on an “as needed basis”. The opportunity and responsibility to reach out to customers for marketing opportunities will also become more frequent through the technologies. Imagine a servicer providing the ability to refinance to a lower rate just by accepting an offer sent to them electronically. Imagine consumers being given a choice as who they want to service their loans with. All of these are possibilities and more than likely many will probably happen.

****Conversations will change and embracing technology will have to happen for everyone in the mortgage space. The question is- are you ready to look through a new lens and see opportunities that are going to be created.

These new generations are definitely going to impact our business. The question that needs to be answered however is who will drive these changes, us or them.

****ABOUT THE AUTHOR:
****Barbara Perino is a Certified Professional Co-Active Coach guiding her clients who are executive leaders and their staff. Barbara has been trained through The Coach Training Institute (CTI) located in San Rafael, CA. She completed a Coaching Certification Program through CTI and the International Coaching Federation (ICF). Prior to becoming a coach, Barbara was a 16-year veteran of the residential mortgage industry in a national sales management capacity for property valuation and residential mortgage service providers.

****ABOUT THE AUTHOR:

****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 having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.

**By Keven Smith**

***Of all the words that have buzzed around the mortgage industry over the last half-decade, “transparency” has droned the loudest. Whether speaking about origination or servicing, transparency has become a term that is used with great frequency and volume in discussions at every industry gathering. Far from a meaningless cliché, the word actually signals survival for the mortgage business, because without it, there are few incentives for investors to entrust their funds to an industry that has failed them in the past.

****Investors have been the industry’s life’s blood for generations, ever since savings accounts ceased being the wellspring for mortgage loans. Freddie Mac and Fannie Mae have been strong supporting players in mortgage investments for a long time in one way or another, but their futures are uncertain. Presumably only one will survive out of conservatorship, and its role will transition current sellers away from sole dependency on the re-formed GSE toward private capital that is enticed back to the market to provide the majority of the funding.

****But to make that happen, there has to be complete confidence in the soundness of the loans and the value of the collateral. And shedding light on each case is the way to bring true transparency back to loan pools – with digital precision and analytics providing the source of illumination. The Uniform Loan Delivery Dataset (ULDD) is a tremendously important vehicle for bringing capital in all its forms back to lending. It could be said that without it, a return of large-scale private capital to mortgages might well be an impossibility.

****It must return if the housing and home finance industries are ever to see the robust growth that have laid the foundations for a robust national economy over recent generations. While it may be true that homeownership is not for everyone, it is surely a good thing for two thirds of Americans, give or take a percentage point here or there. The cascading effect of a healthy housing industry makes everything else in the economy work, in every sector from manufacturing and services, and in almost every business segment, from textiles to automobiles. The funding requirements are too large for the government alone to handle, so a healthy private investment market is a must.

The ULDD is the logical next step toward making everything that should be visible in the loan file is transparent for investors to vet before and after they make the decision to invest in loan pools. Having each data element correct and able to be tracked means tremendous possibilities for thorough and complete analytics for the first time ever on a very broad scale.

****As an analogy, consider the automobile insurance and repair industries. By deconstructing a given make and model car down to its tiniest components, insurance companies use technology to predict repair costs with extraordinary accuracy. A fender bender doesn’t just mean a new fender; it may mean components from engine mounts to water pumps and other structural necessities must be replaced. Using modern softwares that contain complete data on how damaging impact in one part of the car affects components throughout the rest of the vehicle has automated the process. Today an estimate is made transparently and checks are cut in a matter of hours, making the “get three estimates and then we’ll talk” conversation with insurance providers mostly a thing of the past. Body shops take a look and communicate the information to insurance companies and come to almost instantaneous agreement in most cases.

****The ULDD is analogous to this process in that individual data points in the loan file can now be viewed and understood by analysis methods that will quickly evolve to a standardized, uniform state of the art. It is a first step, granted, but it will not be the last. Currently involving hundreds of data elements, the time will come when thousands of them are collected and utilized by investors to completely understand the finest points of the loans they are buying into and the collateral that underpins them.

****For the present, the ULDD will be the source of some hassles for lenders and others as it rolls out, but sophisticated loan origination software, that all-important tool that has been the lender’s essential partner for a long time, makes compliance with the new requirements quite simple. The reporting capabilities made possible by the digital way in which the better LOS operates make loans highly transparent right now. As the ULDD takes hold and expands its scope, loans will be more readily screened by the GSEs and should reduce the greater hassles of loan repurchase demands by virtue of keeping each loan’s data instantly available.

****The ULDD is the necessary first step toward providing the transparency the current investment community demands. It is also the basic model for the detail and analysis future investors will need to find their way back to the mortgage industry.

****ABOUT THE AUTHOR:

****Keven Smith is president and CEO of Mortgage Builder Software, the award-winning Michigan-based developer of advanced LOS systems that has been a leader in its field for over fourteen years.  Smith has more than 20 years of experience in mortgage technology. He can be reached at Keven.Smith@MortgageBuilder.com.

**By Jennifer Miller**

***The rapidly changing regulatory landscape and the new GSE requirements significantly impacted the appraisal management and collateral valuation industries in 2011 and continue to do so in 2012. Without critical innovation and widespread industry adoption, difficulties with the newly required MISMO 2.6 appraisal data could have choked origination pipelines at a time when this industry can least afford it.

****It took the industry’s foresight and commitment to prevent what could have been a massive interruption in the delivery of appraisal data. Imagine appraisers attempting to comply with the GSEs’ new requirements without innovative solutions. Appraisers would be trying to convert their own report data to the required XML format. They would be attempting to attach it to unencrypted e-mail messages (a violation of Federal law which carries severe financial penalties of up to $100,000 per violation with possible prison time, and falls squarely on the lenders’ shoulders). Finally, they would be troubleshooting the delivery and receipt of that data on a per-client basis. It would have been ugly.

****Instead, leading appraisal management operations quickly adopted new technology that streamlined compliance. The past several months has been a great testament to how quickly and successfully our industry can adapt to change. I’m extremely proud of how our industry has leveraged technology to overcome obstacles during the past year.

****We had a unique opportunity to innovate a solution that streamlines the delivery of compliant appraisal data and ensures the easiest possible transition for all lenders and AMCs to easily comply with the GSEs new Uniform Collateral Data Platform (UCDP).

****Speed to Market

****The key to successfully addressing the MISMO 2.6 appraisal data requirements not only relied upon innovative technology but also in the speed at which it could be delivered to the masses. Vendors were challenged with how to get this innovative solution in so many hands, very quickly. It started with the appraisers.

****Today’s most innovative provider’s appraisal formfilling software is used by over half the appraisers in the country, which allows for significant traction due to having a presence on the desktop of a majority of the nation’s appraisers. In addition, they released a free product to all appraisers regardless of the formfilling software they use that allows them to deliver a report in the newly required MISMO 2.6 standard.

****If you conservatively estimate it would take an appraiser ten minutes to manually do all the tasks, what this new innovation does for them automatically, we can conclude that this innovation has saved appraisers a total of 15 million minutes, or 250,000 hours since September 1^st.

****With this innovative solution, appraisers can just click a button and the report is converted, automatically uploaded to a secure server, and a notification e-mail is sent to their lender or AMC client alerting them of the finished report.

****When the lender or AMC receives the e-mail notification, they can click on a link to be taken to the secure server, and then easily and quickly download the required XML and/or a PDF of the report. The secure server also shows salient property details so lenders and AMCs can get report highlights immediately.

****Links in the delivery portal also allow the client to download and install the optional but highly recommended UAD Reader application as well. With UAD Reader, the XML file can be examined, printed, reviewed, and managed in native XML format. UAD Reader includes many client-specific features integrated seamlessly with the solution, and is in use on thousands of underwriter and AMC desktops nationwide.

****The lender or AMC recipient can then manage the report data from within this innovative app. They can submit directly to UCDP via the provider’s direct integration with the GSE portal, free of charge.

****The free direct integration to UCDP is of huge significance to the nation’s smaller lenders and AMCs. Their percentage of the nation’s overall origination volume continues to climb, yet they do not have the same technology and financial resources found at large lenders and AMCs. Instead of UCDP and appraisal compliance requirements significantly impacting their operations expenses, they can sail through with this innovative solution’s direct UCDP integration without paying a dime.

****In addition, all users will have seamless access to the industry leading suite of solutions, including a full suite of compliant appraisal ordering tools, robust appraiser selection, customizable quality control tools, and end-to-end audit trails for satisfying regulatory compliance exams.

****The Right Place

****I’m especially proud that Mercury Network played such an important role in this transition. No other technology provider has the presence on appraiser desktops, or the experience in appraisal data and compliant delivery to streamline deliveries on this scale.

****Appraisers and appraisal managers quickly embraced Mercury Network’s free service, DataCourier. DataCourier is an automated “formfiller agnostic” UAD appraisal packaging and delivery service. It enables any appraiser to securely deliver UAD compliant appraisals to any lender or AMC in the country, with the assurance that all newly required appraisal report components are included and compliant. Since the UAD requirements went into effect on September 1^st, there have been over 1.5 million compliant appraisals delivered via DataCourier. Those appraisals were error-checked before delivery, sent with all required elements, and securely delivered in accordance with consumer privacy protection. The service averted what could have been a quagmire when the new appraisal requirements went into effect late last year and early in 2012.

****Mercury Network was the backbone for over 3.7 million appraisals in the last year, and with DataCourier’s volume surpassing our expectations at nearly 100,000 transactions each week right now and still growing rapidly, it’s quite possible that Mercury’s volume could double this year. DataCourier is a great example of how we can leverage the quality of our innovation and the reliability of our technology to solve massively scaled problems at both ends of the transaction. It’s easy to claim you can transform an industry with technology, but our dominant market share allows us to make good on that promise, and quickly.

****Mercury Network currently supports over 20,000 appraisal deliveries a day, and DataCourier gives any lender or AMC access to that experience and reliability at no cost. All major technology vendors innovated UCDP solutions over the past year because they had to, but no other company built a direct integration that can be used by anyone, free of charge, that also includes hassle-free and compliant receipt of the appraisal data from the appraiser themselves. a la mode’s innovation solved the problem from all points in the workflow chain: The appraiser’s delivery, the lender/AMC receipt, and the lender/AMCs’ delivery to the GSEs.

****DataCourier has contributed to positive change in the industry by preventing serious appraisal delivery delays, dramatically reducing hassles with delivery and receipt, and offering a compliant solution for appraisal delivery that keeps lenders out of very serious GLBA violations. In addition, DataCourier levels the playing field for smaller lenders and AMCs. They now have access to more powerful technology than many of their larger competitors, without any investment. Rather than using the new regulations and GSE requirements to force lenders and AMCs to buy extra solutions, a la mode chose the longer range strategy of providing first in class technology for free to anyone. That choice is consistent with our 26 year history of confidence that great, innovative technology will speak for itself. When lenders and AMCs use DataCourier, they will like what they see and want to try other Mercury Network software tools.

****From compliance expediency, to the avoidance of hassles and manual, error-prone file conversion and delivery, DataCourier has had a substantial impact on the industry. DataCourier saves appraisers, lenders, and AMCs tremendous time and overhead expense. In addition, DataCourier’s secure delivery of the NPI contained in an appraisal report shields lenders and AMCs from potentially catastrophic violations of the GLBA, where penalties include fines of $10,000 per violation.

****We’re proud to be able to identify the opportunity, then provide the technology to the nation’s appraisal management professionals. Usage has far exceeded our expectations, and all of the appraisers, lenders, and AMCs using it have significantly contributed to a smooth transition to UCDP. In this time of uncertainty, the industry’s avoidance of what could have been a major obstacle, has served us all very well.

****ABOUT THE AUTHOR:

****Jennifer Miller is EVP, Products for a la mode’s Mortgage Solutions Division. She manages the flagship product, Mercury Network, an online Vendor Management Platform allowing lenders and AMCs to manage their entire appraisal workflow while being compliant with all appraisal independence standards and banking security regulations. Mercury Network has been used by more than 200,000 mortgage professionals since 2002 to completely automate the full round trip of tens of millions of appraisals, and has just passed the 10,000 transactions per day milestone.

**By Roger Gudobba**

***In December 1911, when future IBM Chairman Thomas J. Watson, Sr., managed the sales and advertising departments of the National Cash Register Company, he is reported to have said at a sales meeting: “The trouble with every one of us is that we don’t think enough. Thought has been the father of every advance since time began. ‘I didn’t think’ has cost the world millions of dollars.” And he wrote “T-H-I-N-K” with a blue crayon on the easel behind him.

****Almost immediately, the one-word slogan had been placed on signs in every department at NCR. Watson brought that concept with him when he later joined C-T-R, the forerunner of today’s IBM, as general manager in 1914. “THINK” appeared in C-T-R in the form of a large block-letter sign, framed and placed in offices and plants, and was printed in company publications. In the early 1930s, the THINK motto began to take precedence over other slogans in IBM. “THINK” – the iconic desk sign or plaque made by IBM in the 1960′s was translated into many languages. I still have mine on my desk today.

****The concept was simple. Think before taking action. Computers were a relatively new phenomenon and the possible applications and potential solutions. Back then the computer was initially used mainly to do things pretty much as they always had been done, except to do them more rapidly or, by some criteria, more efficiently. Because of the lengthy time to design, program, test and implement new solutions it was important to think through the solution and hopefully avoid multiple iterations before the end result. Flow charts were very common and provided a visual look at the application before starting.

****My recent articles focused on a book that stated “to be able to build intelligent machines we needed to understand how the human brain worked.” Let’s explore that a little further.

****The brain is divided into two hemispheres that each control specific functions. The left hemisphere of the brain is responsible for logic. When you’re doing mathematical and analytical thinking, for example, you’re utilizing the left side of your brain. The right hemisphere of the brain is responsible for emotions. When you’re creatively thinking or daydreaming, the right side of your brain takes over. You’ve probably heard of “left-brained” people and “right-brained people” and wondered what the descriptions mean. These terms refer to a person’s tendency to predominantly use one hemisphere (side) of the brain rather than the other. Because the left hemisphere and right hemisphere specialize in certain abilities, having those abilities demonstrates which of your hemispheres is dominant.

****Does a difference exist between left-brain dominant and left-brain dominant individuals? According to creativity researcher John Chaffee (2000), there is a definite distinction:

****1. Left-brain dominant individuals are usually logical in their approach to problems and situations, serious in nature, knowledgeable about a variety of subjects, linear in thinking, structured and organized in their jobs and lives, and rational in making decisions.

****2. Right-brain dominant individuals are usually highly intuitive; have little sense of time; enjoy music, clutter, and creative thinking; make decisions based on hunches and emotions; and use holistic thinking.

****Critical thinking is the process of thinking that questions assumptions. Critical thinking involves logical thinking and reasoning including skills such as comparison, classification, sequencing, cause/effect, patterning, webbing, analogies, deductive and inductive reasoning, forecasting, planning, hypothesizing, and critiquing.

****Creative thinking is a way of looking at problems or situations from a fresh perspective. Creative thinking involves creating something new or original. Most ideas are in fact modifications of something else that exists within your knowledge base. By using imagination, intellect and existing knowledge you can form in your mind a new thought or idea.

****While critical thinking can be thought of as more left-brain and creative thinking more right brain, they both involve “thinking.”

****A study conducted in 2007 by John Kounios, professor of Psychology at Drexel University, and Mark Jung-Beeman, of Northwestern University, compared the brain activity of creative and noncreative problem solvers; and the results of the study showed creative individuals experience an “Aha! Moment” – a method that’s different from the method utilized by individuals who tend to solve problems more methodically.

****Contrary thinking: You might also try reversing the order in which you do a particular operation or project. Designer Christopher Williams tells the following story about an architect who built a cluster of large office buildings that was set in a central green. When construction was completed, the landscape crew asked him where he wanted the sidewalks between the buildings.

****”Not yet,” was the architect’s reply. “Just plant the grass solidly between the buildings.” This was done, and by late summer the new lawn was laced with pathways of trodden grass, connecting building-to-building and building to outside. As Williams put it, “The paths followed the most efficient line between the points of connection, turned easy curves rather than right angles, and were sized according to traffic flow. In the fall, the architect simply paved in the pathways. Not only did the pathways have a design beauty, but they responded directly to user needs.” Doing the opposite of what’s expected can be an effective strategy.

****Linus Pauling, a Nobel Prize winner, said, “The best way to come up with a good idea is to come up with lots of ideas.”

****How does this apply to the mortgage industry? For instance, in as early as the mid 1990s, nobody thought of or heard of MISMO. Now the FHFA is mandating the use of MISMO as a way to ensure loan quality. Who would have thought MISMO would have evolved to this point?

****Well, maybe some of us had the hope that this would be the case. But generally speaking, MISMO was about a number of well-meaning mortgage executives, myself included, coming together to solve real industry problems. We had a bold idea: the mortgage industry needed to adopt a single language for defining and transmitting data. What come of that simple idea? Easier and tighter integrations, more data quality, SMART Docs, etc. This is just proof that when you take the time to think, the benefits can be endless.

****So, here’s final thought to ponder: “Good thinkers are never at a loss to solve problems, they never lack ideas that can build an organization, and they always have hope for a better future. A person who knows how may always have a job, but the person who knows why will always be the boss.” – From Thinking for a Change, by John C. Maxwell.

****ABOUT THE AUTHOR:
****Roger Gudobba has over 25 years of mortgage experience. He is CEO at PROGRESS in Lending and Chief Strategy Officer at technology vendor Compliance Systems. Roger is an advocate of data standardization and a more data-driven approach to mortgage. Roger can be reached via e-mail at rgudobba@compliancesystems.com.

**By Michael Hammond**

***The old saying goes: Imitation is the highest form of flattery. So, when you’re a technology vendor and you see your competitor release a new feature, you think you need to incorporate that feature into your offering to be successful. Or if you’re a lender and the lender down the street rolls out a new product you think you have to offer that product, as well. We see this over and over again in our space.

****Is imitation what really defines success? Or does it pay to be first on a few things and actually bring something new to market? The interesting fact according to Heidi Grant Halvorson, a motivational psychologist, is that even if you were to talk to successful people, most don’t fully understand why they were successful. In her articled entitled “Nine Things Successful People Do Differently” she suggests that “decades of research on achievement suggests that successful people reach their goals not simply because of who they are, but more often because of what they do.” Here are nine things that she says successful people do differently:

****1. Get specific. When you set a goal, try to be as specific as possible. “Lose 5 pounds” is a better goal than “lose some weight,” because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there.

****2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it’s not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.

****3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don’t know how well you are doing, you can’t adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.

****4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don’t underestimate how difficult it will be to reach your goal.

****5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.

****6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. The good news is, if you aren’t particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don’t have the innate abilities successful people have. If that describes your own thinking … well, there’s no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.

****7. Build your willpower muscle. Your self-control “muscle” is just like the other muscles in your body — when it doesn’t get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals. To build willpower, take on a challenge that requires you to do something you’d honestly rather not do. Start with just one activity, and make a plan for how you will deal with troubles when they occur.

****8. Don’t tempt fate. No matter how strong your willpower muscle becomes, it’s important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don’t try to take on two challenging tasks at once, if you can help it. And don’t put yourself in harm’s way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.

****9. Focus on what you will do, not what you won’t do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. If you want to change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like “If I am starting to feel angry, then I will take three deep breaths to calm down.” By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.

****So, what’s the takeaway from these nine points? How can mortgage technologists and lenders use these points to thrive? They have to remember, it’s not just what you are, but what you do, that will lead to success.

****In the end, the successful person will use these nine points to turn obstacles into assets. In the mortgage space there is a lot of game changing legislation still to come. If you as a company can’t adapt to these new rules and even use these new rules to thrive, you won’t be successful.

****In the article “How to Turn an Obstacle into an Asset” by Leonard A. Schlesinger, Charles F. Kiefer, and Paul B. Brown, they say that people who succeed at work and in life believe and act as if “everything is a gift.” Well, maybe not every single thing imaginable. But assuming that everything is a gift is a good way of looking at the problems and surprises you’ll encounter in any endeavor, such as, for example, in getting a new venture off the ground, obtaining buy-in with your boss, or launching a new product line in an ultra-competitive market.

****Why should you react to a problem with gratitude, whether you are trying to start a business or create anything else? There are a number of reasons.

****First, you were going to find out eventually what people did and did not like about your idea. Better to learn it as soon as possible, before you sink more resources into the idea, venture or product line, etc.

****Second, the feedback could take you in another direction, or serve as a barrier to your competitors. You thought you wanted to open a restaurant, but a quick survey told you potential customers thought the area was saturated. But more than a few of them said they would love a place that simply had ready-to-go take out to heat up at home.

****Third, you got evidence. True, it was not what you were expecting or even wanted, but that still puts you ahead of the person who is just thinking about doing something (like opening a restaurant in your neighborhood.) You know something they don’t, and that is an asset. You are ahead of the game.

****But what if it’s really bad news? It’s a disappointment. You were absolutely certain that your boss would approve your idea for a new software program, and she said no in a way that is still echoing down the corridor. No reasonable person can define what you’ve encountered as anything but a problem, and most people will try to solve the problem. (“Maybe she will like the idea if I go at it this way instead.”) That’s fine if you can. The problem has gone away and, again, you’ve learned something that others might not know. (The boss hates Y, but she loves Z.)

****But what if you can’t solve it? (She hated “Z,” too.) Accept the situation to the point of embracing it. Take as a given that it won’t ever change, and turn it into an asset. What can you do with the “fact” that it won’t ever change? Maybe it presents a heretofore unseen opportunity. Maybe you build it into your product or service in a way that no competitor (having not acted) could imagine. Could you do it on your own? Could you take the idea to a competitor and use it as your calling card to look for the next job? Instead of resisting and lamenting it, treat it as a gift and turn it to your advantage.

****ABOUT THE AUTHOR:

****Michael Hammond is chief strategy officer at PROGRESS in Lending Association and the founder and president of NexLevel Advisors. NexLevel provides solutions in business development, strategic selling, marketing, public relations and social media. He can be reached at mhammond@nexleveladvisors.com.

**By Lloyd Booth**

***There has never been a greater focus on loan quality than there is today. As many lenders continue to operate with outdated loan platform technology, the issue has become a critical one for our industry and its future.

****Fannie Mae’s Loan Quality Initiative (LQI) underscores the need for originators to validate loan data before, during and after loan delivery even more. To respond effectively, lenders today must take the necessary steps to insure quality loan data at every step of the loan process.

****Traditionally, loan data quality has been demonstrated merely by the fact that all of the data for a given transaction is located in one place and is easily accessible. Recent history, however, has shown us that this is a major point where mortgage technology platforms fail to perform. In many cases the data for a transaction can be spread out over several systems, controlled by multiple parties and representing different states (versions) of the data. For example, a lender sends its data to its closing doc prep vendor, who produces a loan closing package using their technology platform. The closing document vendor may generate additional data points such as an aggregate accounting adjustment, or the APR. If those data points are not automatically transmitted back to the lender it is possible to end up with two separate sets of data.

****This is a problem because the only data set that matters is the one reflected on the actual closing package executed by the borrower. Too many lenders still have a process in place where they must re-enter those additional data points back into their LOS, and rarely is this data exchanged through a fully interfaced, automated process.

****The lack of data continuity becomes a significant operational problem when a closing document package is prepared by the document preparation vendor with information from multiple sources. Consider how the settlement side of the transaction fees are provided to the document preparation vendor and more importantly, how those data elements are entered back into the lender’s system. This approach isn’t necessarily wrong, as long as the lender’s data entry is 100 percent perfect.  Otherwise, the result is a discrepancy between that data in the LOS and what was presented to the borrower.

****If a loan stops performing, the lender immediately finds itself in a tough position. A simple data entry mistake can be acceptable as long as the lender can explain how it happened, but that’s a fairly expensive process in itself.

****In the “good old days,” poor data quality was not an urgent problem but rather a cost of doing business during a very profitable time. Today lenders are routinely forced to buy back loans even years after they’ve closed; data quality has become mission critical.

****Unless a lender’s third party vendors have similar standards for data retention, it can be impossible to rebuild a transaction without hard copy documentation – an onerous task for sure.

****What to do? Fortunately there are loan origination systems currently on the market that utilize more modern data management models. Within a single database, they capture, retain and manage data across the multi-platform and multi-vendor production process.

****The first step for lenders is to have a complete and accurate transaction data set that represents every unique data element. Historically, the solution has included an end-to-end system where there is, essentially, a single vendor. But for those lenders who subscribe to a best-in-class philosophy, something more is required: a single database that makes itself native to myriad third party systems. Such an approach bridges the gap and allows best-in-class systems to manage data like a single end-to-end solution.

****Today, everyone talks about the importance of data transparency, but transparency or, more appropriately, data clarity, is typically discussed in the context of data standardization and the ability to access the data. And in practice, it is usually just the most recent version of the data. Perhaps the most undervalued aspect of data quality is the ability to recognize, retain and utilize various states of the data in any given transaction.

****Data transparency is a good start, but it isn’t a complete answer to total data quality. From the investor’s perspective, they get the last data set on a closed loan but don’t have visibility to the evolution of that data. For example, the borrower’s FICO score is often modified between application and closing. (It’s common for data to evolve as the lender perfects the data through the manufacturing process). But without visibility to that evolution, the investor lacks confidence in the data. How can the investor be certain that the FICO score wasn’t pencil-whipped at the 11^th hour to artificially meet its guidelines? That’s an extreme example, but we know that investors are looking for any excuse these days to push back on lenders. With the right technology though, the investor has access to every change and version of the data.

****More importantly, what resources does a lender have to stave off an investor’s pushback of a loan? If an investor has doubts about the loan data, can the lender easily produce the historical documentation of that data? As pushbacks become more frequent, the ease and efficiency of doing so is becoming imperative to survival and growth. If the lender is consistently forced to throw valuable human resources at the problem, its long term prospects are diminished. The bottom line definitely takes a hit.

****Another high profile example is the good faith estimate (GFE). There has been so much effort to insure that GFEs are done correctly that lenders are often generating multiple GFEs to keep up with the standards and regulation requirements. I would estimate that up to 80% of new loans include multiple disclosures.  The result is a level of uncertainty tied to the advance disclosure in a package. How is an investor to know if it is the one that aligns with the last iteration? Is it important that they know that there were five different disclosures that went out for that particular loan?

****Some loan production systems have the ability to snapshot multiple GFE’s for any particular loan, but they rarely have the ability to capture actionable data from those images. For those that do, the benefits include more than higher compliance standards.

****A robust and fully integrated imaging platform offers the level of data quality that makes thorough business intelligence (BI) possible. The lender can really dive deep into knowledge discovery and pattern recognition within its production pipeline to drive efficiencies. For example, most systems can tell you the rate of disclosure per loan officer, but they can’t evaluate each disclosure individually. With a fully integrated imaging platform that captures and translates the images into data, the lender can actually identify why each disclosure was made and make subsequent changes to its people or its business processes.

****Fannie Mae’s LQI presents another level of complexity to data management. LQI has mandates regarding calculation thresholds that change as the loan evolves depending on other parameters within the loan. So the history of the data becomes a much more important factor to ensuring full compliance.

****New parameters required under LQI include anything from fee changes to borrower obligations that may have changed (within specific thresholds relative to loan type). If a loan starts as an FHA loan, for example, and remains an FHA loan – there is no problem. But what if a loan starts as a conventional loan and halfway through, it’s decided to switch it over to an FHA loan? The thresholds and tolerances will differ. When that happens, being able to understand the evolution of the data becomes more important. Many systems will continue to indicate to the lender that the loan is still a conventional loan with a fixed rate on a specific loan amount; the last iteration of the data and has no bearing on how many times it may have changed prior to getting to that point.

****As the lending process continues to evolve and becomes more complicated, lenders must be able to provide quality loan data throughout the entire loan origination and closing process. The industry’s collective embrace of data transparency is certainly a move in the right direction, but lenders should remember that it is impossible to have true transparency if they do not have the full story behind that data.

****Ultimately, LOS platforms with robust data audit frameworks that automatically record and retain the evolving states of the loan data are becoming more popular. These advanced systems reduce investor pushbacks, increase the success rate against the remaining pushbacks, and give lenders much deeper access to their data with which they can drive efficiencies

****ABOUT THE AUTHOR:

****Lloyd G. Booth is the co-founder, president and chief operating officer of Greenwood Village, Colo.-based Blueberry Systems, LLC, a provider of advanced technology solutions to the mortgage and financial services industries. Booth co-founded the company in 2005 to develop the next generation of loan production technologies. He is responsible for product design, engineering and corporate operations. Booth has more than 25 years of leadership and mortgage lending experience.

**By Sharon Matthews**

***In our case, eLynx’s partner program brings together best-in-breed organizations that supports progressive stages of the mortgage process to provide a single, end-to-end view of a loan, and that integrates seamlessly with unique workflows and processes.

****Why is this important? It is critical for lenders to have and enjoy the benefits of an end-to-end electronic lending workflow without their established systems and processes being disrupted. Increasing regulatory and compliance requirements, combined with loan quality initiatives by leading investors, requires lenders to provide greater transparency for each step in the loan lifecycle. An increasing need to monitor and validate loan data has been levied by investors, which in turn necessitates ways for the lender to assimilate sources of data from a variety of systems and vendors. By connecting to the eLynx network, we provide lenders a total fulfillment solution that does not require multiple paths and exception processes to complete transactions. We’re able to achieve these things by focusing on integrated data and a transparent transaction status, which is critical to our business, our customers and for our industry.

****Data & Transparency

****Supporting the progression of eLending and loan quality initiatives has emphasized transaction data associated with the supporting documents. However, as data has become the focus, it has introduced challenges for all parties involved in the origination lifecycle to keep the flow of data between operational processes seamless and auditable. Underlying support of standards, like MISMO and ULDD, provide a common language to communicate making evolution towards end-to-end integration more feasible. As the requirements for additional transparency are relatively new, efforts to ensure seamless data integration do not come quickly. These integrations just add to the efforts of overburdened technology and business resources from the lenders and the additional work needed to coordinate with suppliers and vendors.

****At eLynx, we understand that every lender is unique. The way they work operationally, the systems used, and their objectives are diverse, which means there is no one-size-fits-all solution. That’s why we’ve extended our partner program to improve the flow and auditability of data throughout the transaction by integrating with industry service providers. This minimizes the disruption caused by new and evolving requirements.

****Through these partnerships, our integrated network can better serve lenders who need to establish a connection with many service providers and organizations to gain access to a single, end-to-end view into the status of a loan, and to do so with a single connection point. Enabling the transparent access and reporting throughout the loan lifecycle is a key result of the partner program. Using direct integration to partner services, the provenance of loan data is maintained and an audit trail for all actions and results is preserved.

****Fostered through a commitment to data and standards, our partnerships span from document preparation and compliance services to investor delivery through eRecording and eVaulting.

****While this breadth of services is important, it’s also key that the data transferred throughout all these connections is of high quality. Specific quality controls are either embedded directly into the eLynx data collection mechanisms, or are integrated at specific points in the mortgage lifecycle. Consistency checks and balances ensure the data itself has relative integrity. And partnerships with external organizations, such as title underwriters, license bureaus, or third party non-credit companies, ensure the data is obtained from reputable sources. All together, the span of connections throughout the mortgage lifecycle and the improved quality of data enable mortgage lenders to provide the transparency required by the industry today.

****Come Together

****Lenders are being severely challenged with keeping up to speed on frequent and wide-ranging changes in regulatory requirements.  By providing alternatives using leading document preparation and compliance providers, the eLynx partner program allows our lender customers to use existing eLynx network connectivity and feed the document provider partner with data needed for the transaction. These partnerships allow us to accommodate a wide-range of unique needs. eLynx is able to integrate and extend the data while maintaining a complete and compliant audit trail throughout the process. A data-centric document preparation vendor can be used for lenders who are closer to eLending initiatives, allowing easy migration to eMortgage. Most importantly, this ensures data consistency between the LOS, document preparation, and fulfillment processes throughout the loan lifecycle.

****Yet another group of partners in the eLynx network, title underwriters provide integrated data services to the eLynx electronic closing network. Through direct data integration with TU settlement systems we can validate the identity of settlement agents and their standing with title underwriters before closing documents or funds are released. The addition of independent data sources allows yet another level of validation during the closing processes and allows further evaluations of the title or settlement companies, agents or attorneys, and other closing workflow participants. This integration helps increase accuracy and reduces the cycle time and costs associated with loan settlement activities by eliminating unnecessary rekeying, duplication and errors associated with loan data, while also providing a consistent audit trail of all loan data. Our electronic closing network can also reduce manual processes and increase data accuracy through electronic reconciliation of the HUD.

****The eLynx partner program provides access to multiple vaulting and recording providers, ensuring regulatory and investor compliance with industry standard formats, data validation and loan delivery standards. This extension of a consistent and uninterrupted integration of loan data through post-closing processes to the secondary market allows for a single view of loan metrics, quality, and performance. The real-time data can be evaluated for continuous improvement of loan processes and increased customer satisfaction that can benefit the industry at-large.

****Moving Further

****We can, as an industry, restore trust with borrowers and investors through collaborative partnerships between those representing different stages of the mortgage lifecycle. Together, mortgages and loan data can be processed securely with enhanced transparency and efficiency, while maintaining the integrity of the data and traceability of the documents. This collective effort to restore trust, not only in the process, but in the data itself, will encourage investors to participate in the mortgage market more actively again, and then lenders to lend, which will strengthen our overall economy. This is mission critical to industry recovery and better serves our lender customers by bringing borrowers back to the table.

****ABOUT THE AUTHOR:

****As President and CEO, Sharon Matthews oversees the overall operations of the company and is responsible for the growth of eLynx’s market leadership position providing data-driven document distribution, collaboration, and connectivity services for the financial services, mortgage banking, and real estate industries. Matthews came to eLynx with more than 25 years of senior executive experience running profitable large technology and software companies.

**By Michael Hammond**

***We all like to think of ourselves as master marketers, but the fact of the matter is that it isn’t an easy skill. Further there are a lot of facets to marketing well. For example, in an article that I read recently called “9 Steps to Building a Content Marketing Strategy” by Krista Neher, she talks about the power of words. Let’s face it, brands need to provide value in order for consumers to pay attention to them, and increasingly, that value is found in content. Providing the right content when and where your consumers want it in a format that is easy for them to digest is key to content marketing. Here are nine steps to keep in mind:

****Step 1: What do you want to achieve? The first step to understanding content marketing is to define your goals and objectives. Your broad goal is probably to drive sales and grow your business, but a more specific objective for your content strategy will allow you to create more specific and meaningful content.

****Step 2: Who do you want to reach? Defining your audience as specifically as possible is key to a solid content strategy. Know your specific goals, and define the demographics, psychographics, and behaviors of your audience.

****Step 3: Identify triggers. A trigger is an event that prompts someone to seek out information online. An event or motivation triggers the initiation of a search. Understanding the triggers for your audience will help create a content strategy that gets results.

****Step 4: What is the editorial strategy? This is an area that’s often overlooked or given only a cursory thought to, but is one of the biggest keys to success. Most businesses will describe their tone with a few words, but when bringing their content to life it lacks a clear personality. Consider the tone, values, and voice of your content. What tone could best achieve your marketing objectives and speak to your audience? A clear personality or tone in content makes it more relatable and allows your audience to feel connected.

****Step 5: What content should you create? The content creation plan should include the themes, messages, and topics. To create a good content strategy, it’s helpful to research the landscape and look to discussion forums, Twitter, search, and blogs to understand what your audience is interested in.

****Step 6: What forms should your content take? Should the content be a white paper/e-book/download, a video, photos, infographics, a slideshow, articles, blog posts, webinars, or live chats? Based on your objectives, a landscape analysis, and knowledge of your target audience, determine the most appropriate and achievable forms for your content.

****Step 7: How do you make it better and more creative? This step should be added to any planning process, digital or otherwise. Once you have the basic idea – the content and the form – consider how you can creatively make it into a bigger or better idea. Brainstorm positioning, titles, partners, and execution to make your content really stand out.

****Step 8: How will the content be created? This step is pretty obvious – decide who, what, and when.

****Step 9: How will the content be promoted or syndicated? This final step is also often overlooked. If you build it they probably won’t come. Good content needs a good syndication and promotion plan. Consider paid, earned, and owned media as options. Use social networks to spread the message, and integrate social media sharing into the design of your content, not as an afterthought.

****Now try creating that powerful content today that will help you grow your business tomorrow.

**By Ted Hicks**

***Yes, we’re in a downturn. Origination volume is predicted to fall again this year. However, at a time when you have fewer players and industry consolidation, the 15-year low volume prediction makes sense. Nothing I hear would lead me to believe otherwise. Why? Credit is still tight and foreclosures continue to be on the rise because there are still a tremendous number of people underwater on the value of their home now as compared to when they bought it. But with adversity comes opportunity. The good lenders will survive because they are able to offer superior service. How will the good technology vendors survive? Here’s my take:

There are certainly fewer opportunities for technology vendors today. So how do stay viable? Easy, you create new products to sell to existing or new clients. You could also enter a new market vertical. Lastly, you can grow by acquisition. Public companies are under constant pressure from investors to increase profits, even in a depressed market where it is extremely difficult to do. We at Calyx Software are in a good place because we are privately held and we have one owner/shareholder. Public companies are under the gun to grow, and if they don’t the investors exit.

Philosophically, this makes sense. When there are industry pressures and increased competition you will see public companies acquire other companies because that is the fastest way to grow, and if that doesn’t work, they’ll shed that acquisition.  There is a natural process of elimination. So, are we going to see more of these types of deals? Yes and no.  Yes, because we’ll most likely see those types of deals coming from the public sector and no, because private companies may do things a little differently.

Private companies will buckle down and invest in themselves more heavily.  They’ll improve their product line and create new complementary products for their clients.  And, only if it makes business sense, they’ll approach companies looking to get acquired.  Private companies have the luxury of being able to make important business decisions without the pressure of investors to grow fast— sometimes too fast.  Their acquisition process tends to be more strategic and more customer focused, without the urgency public companies experience.

The bottom line is that today’s technology vendor has to be just as creative and innovative as today’s lender in order to thrive. But have no fear, we’ve been here before. The long-term future of the space is cyclical. You see four- to seven-year cycles all the time. This could be a 10-year cycle, but I’m more optimistic. The market is turning and the best companies will survive

**By Tony Garritano**

***Yesterday I told you about my friend Tim Anderson moving from LPS to ISGN. Tim has been promoting SMART Docs and the e-mortgage all of his career. He’s a true believer. And I think the time has come. With all the compliance demands, lenders need to automate. It takes a leap of faith, but now is the time to leap. For this very reason mortgage technology companies are increasingly looking to bring on visionaries like Tim to help their lender clients move in this direction. Along these lines, I just heard that Xerox Mortgage Services has brought on two such experienced executives. Here’s the scoop:

****Xerox Mortgage Services has hired Ken Marlin as Vice President of Business Development and Bryan Young as Vice President of Product Management. Charged with expanding the network of Xerox’s BlitzDocs certified partners and providers, Marlin will help lenders, brokers and investors benefit from an expansive network of best-of-breed providers to promote electronic collaboration from origination to the archival of a closed loan.

****“I bring a thorough, practical understanding of the business,” noted Marlin. “I started as an LO before I moved to the vendor side doing RFPs and working on technology implementations in large lenders. Plus I’ve done so many things in the business that I’m very fortunate. I’ve dealt with the business from many different perspectives so I know a lot about the different roles. On top of that, I grew up in a family-owned business. So, making a profit and delivering the highest form of customer service are instinctive to me.

****“At Xerox Mortgage Services I will be building out the bi-directional network. The starting point is that we have a network with industry standard providers. We don’t know the new providers that will be coming into the business that are not strapped with legacy systems that Tim Anderson mentioned when you talked with him yesterday, but we’re eager to meet them. I’m anxiously looking for those new faces. We want to drive services to the lender. The way to do that is through the LOS. So, I’ll look to tightly integrate with as many LOS systems as I can.”

****Bryan Young is tasked with keeping pace with the changing regulatory environment and ensuring the BlitzDocs solution continues to help lenders promote data transparency within the mortgage process.

****“By adding to our experienced team, we’re even better prepared to help our customers respond to changing market conditions and help them find new ways to collaborate, innovate and grow,” said Nancy Alley.

****Marlin previously served as a national account executive and the alliance manager for the mortgage division of Wolters Kluwer Financial Services. Young spent the last decade at Erxchange, a division of Xerox Services.

****“When I was at WKFS, Xerox Mortgage Services stood out as a tool and a company that had great customer satisfaction,” added Marlin. “I always liked the tool because it prepares lenders for the cloud and full e-mortgages. I was also impressed with Nancy Alley. She is fresh, energetic, visionary and she isn’t saddled with a legacy mentality. It’s all about the people you work with.”

****Going forward, Marlin sees more industry contraction and technology acquisitions, but thinks Xerox Mortgage Services will take a different path. “From an industry perspective, I see consolidation of providers. I think we’ll see acquisitions to gain share,” he concluded. “At Xerox Mortgage Services we will stay the course and look to pass data more successfully. We’ll continue to march toward the e-mortgage and be vendor agnostic. We want to move the whole industry toward full ‘e’ processes.”

**By Tony Garritano**

***I am very proud to call Tim Anderson a friend. When I started in this industry as a little pup, he helped me. He took me under his care and showed me the lay of the land. I am very grateful for all the time and effort that he put into guiding me so that I could really understand the space. His friendship is invaluable to me. So, when he told me that he was no longer at LPS I was eager find out where he went and what he would do next. I can tell you, based on my talk with him, Tim Anderson is ready to shake up this space like only he can. Here’s the scoop:

****ISGN Corporation, a provider of end-to-end technology solutions and services to the U.S. mortgage industry, has named Tim Anderson director of corporate technology strategy. Anderson brings more than 30 years of mortgage industry and technology experience to ISGN, where he’ll develop a strategic roadmap for ISGN’s delivery of products, services and technology, helping position the company as the leading driver of solutions in the mortgage marketplace.

****When ISGN started it made a lot of high-profile acquisitions of companies like MortgageHub, Dynatek, London Bridge and others. However, recently we haven’t heard too much from ISGN. Tim Anderson explains, “The company has been laying low. They have a much fuller offering in terms of technology and outsourcing services as compare to our competition. We at ISGN want to address any pain points that our clients have. For example, the client may want to automate underwriting so we can start there and stretch out as they need us to fill future gasps. Some companies are offering technology or outsourcing, but we do both. I’ve been tasked to look at their technology here at ISGN and plan for the future in terms of automating the mortgage process. I will be incorporating technology strategy into their outsource offerings.”

****Anderson has been involved in all facets of the mortgage industry during his career, most recently on the technology side where he helped to develop one of the first e-mortgage platforms, and e-signature and e-vaulting technologies. At ISGN, Anderson will lead efforts to define the company’s technology strategy, enabling ISGN to create next generation products and services that take advantage of evolving web-based cloud technology.

****So, given his long tenure in our space, I asked my friend Tim what his true vision for the future of the mortgage space really was. He said, “The market has changed. The big guys have gone internal to defend themselves against lawsuits on the servicing side. So, I think there will be new entrants that come in with a new approach. These new players will not be mired down with legacy technologies. We’ll also see old players attack the market place with a new approach. ISGN is actively looking to partner with these players to streamline this market.

****“We want to eliminate manual touch points, increase loan quality and maintain compliance,” Anderson stressed. “You have to quit attaching the process piecemeal. We’ve got to move the orchestration of the mortgage process to the cloud. You need to call needed systems through the cloud to perform necessary functions and workflow. Dynatek had a comprehensive plug-in network that we will utilize, but our cloud approach will also interface to other systems through our cloud approach.”

****Anderson sees a more on-demand environment where the client calls the shots, not the LOS. “The client can determine the user interface that they want and we can orchestrate all that for them. It will be a shared and common system. It’ll all be about execution and how we deliver for our clients. The standard outsourcing service level agreements are based on metrics and performance. We will apply that same philosophy to technology. The only way to execute and scale is to automate. In a people-based process you’re only as good as the last person in that role, but there is always turnover. The way to fix that is to automate. There will always be competition for the best producers so you will never have 100% of those good producers 100% of the time. If you can automate and replicate that process you will be much better off, especially when you get audited.”

****Prior to joining ISGN, Anderson served as senior vice president of Lender Processing Services (LPS), and before that as president of SigniaDocs, Inc., where he was involved in the development of e-commerce mortgage products and services. Previously he was vice president of eMortgage services with Stewart Transaction Solutions. As a leader in the evolution of technology in the mortgage arena, Anderson also founded eMortgage Alliance, which supports MISMO open standards for compliant paperless processes for mortgages.

****Now Anderson has to take things even further. He is tasked with reshaping the technology strategy of a large company and aligning that company to fit the present and future needs of lenders. “Nobody can build that silver bullet,” noted Anderson. “You can’t have that one system that does everything, but that’s where the cloud comes in. We can create a cloud-based system of record that standardizes the data, the systems and the process. ISGN is in a unique position to build that new process. The other benefit to working with and being involved with ISGN is that they are not saddled with the old legacy mindset.”

****But industry vets like Dave Demster, Bill Adamowski, Jack Luhtanen and others have led ISGN’s mortgage strategy in the past with limited success. So, I asked Tim why he will be different. “A lot of those guys came from acquisitions,” Anderson answered. “We acquired their companies and brought them in. The problem is that we bought their baby and they were attached to their baby. I don’t come to ISGN through an acquisition. I’m open to new ideas and so is ISGN as a company. I’m not trying to sell a product per se, I’m about creating a long-term relationship and giving the lender what they need now and stretching out from there to automate more and more for the client when they’re ready. I want to build deep relationships with our clients and do what they need. We are not just a technology company or just an outsourcing company, we’re both.

****“ISGN will be bringing in more senior people like me who can develop an implementation process to eliminate pain processes for our clients. I’m happy to be on board a company that has taken the right approach at the right time. We don’t want to be a me too. There are too many people trying to cut price just to stay in the game. We don’t want to be a me too like that, we want to re-shape the mortgage space.”

****Well, if anyone can do it, my friend Tim Anderson can. I’ll be sure to keep you informed about his progress and all the news at ISGN as it unfolds.

**By Tony Garritano**

***We at PROGRESS in Lending believe in mobile computing. Back in October of last year we launch our own iPad app that you can download for free on iTunes. There will come a day when everything is done on one mobile device and that day is quickly coming. Realizing this trend, a prominent loan origination system is now going mobile, as well. Here’s the scoop:

****Mortgage Cadence, LLC, a provider of Enterprise Lending Solutions, Default Servicing Technology, and Document Services for the financial services industry, will debut Orchestrator Mobile, their on-the-go origination technology. Orchestrator Mobile will allow Mortgage Cadence customers to view their leads, pipeline, statuses, and tasks, lock loans, and offer tools like financial calculators. This new mobile web interface is functional on all Internet-enabled devices such as smart phones, iPads, iPhones, and tablets.

****In today’s highly tech-savvy world where communication is exchanged instantaneously, borrowers expect their needs to be met on-demand. In addition, smart mobile devices continue to increase market share at such a rate that exceeds both producer and analysts’ predictions. This is due, in part, to the fact that businesses across the country are leveraging these devices in an effort to make their people and processes more efficient all while giving their clients the very best experience. Loan officers need to be armed with the latest technology to secure and grow their customer’s satisfaction and market share.

****Orchestrator Mobile will give loan officers the ability to proactively meet the needs of their customers by accessing their loan pipeline, viewing statuses, quickly locking loans to keep up with volatile markets, and acting on critical tasks – all instantly from wherever they are via their smart mobile device. This advancement in lending technology is the first full-featured one of its kind and will no doubt shape the future of the mortgage industry.

****With Mortgage Cadence’s mobile origination technology, loan officers are able to search and quote current rates and prices and view assigned tasks. In addition, loan originators can leverage easy-to-use financial calculator tools to further assist their borrowers on the spot.

****Michael Detwiler, chief executive officer of Mortgage Cadence, stated, “I have found that many enterprise applications tend to overlook sales personnel who are the tip of the sword when it comes to generating new business. Our advancements in mobile technology not only take lending to a new level but allow originators to increase sales and customer satisfaction at a time when providing world-class customer service to borrowers is critical. I, for one, would be more than confident applying for a mortgage with a Mortgage Cadence client as these tools take service to a new level.”

**The Trend Is Troubling**

***Interthinx has released its annual Mortgage Fraud Report, which highlights some of the most significant mortgage fraud risk trends based on analysis of loan applications processed in 2011. According to the report, the Employment/Income Fraud Risk Index rose 14 percent during 2011 and has been on an upward trend for more than two years for a total increase of more than 45 percent. The Employment/Income Fraud Risk Index is particularly high for investor loans with an index of 310, which is almost three times the overall index value of 111 and is highest for high-value properties.

****More detailed points highlighted by Interthinx analysts include the following:

****>> The fraud hot spots for 2011 are very similar to those observed in 2010. The top six states with the highest overall levels of mortgage fraud risk in 2010 were again the riskiest six states in 2011. Mortgage fraud risk remained consistent from 2010 to 2011 in the Metropolitan Statistical Areas (MSAs) as well, with 16 of the 20 riskiest MSAs repeated from the previous year. This alarming degree of persistence suggests that it is going to be a long road back for these MSAs and states. They are all experiencing high levels of foreclosure activity, and the predominant mortgage fraud schemes center on distressed borrowers and properties.

****>> Nevada has the highest mortgage fraud risk in the nation, with a risk index value at 245, which is 99 points higher than the national mortgage fraud risk index of 146. Over the last eight years, Nevada has experienced a cycle of fraud leading to an artificial boom followed by a devastating bust resulting in the largest house price declines, unemployment rates, and foreclosure rates in the nation. High fraud risk, associated in particular with foreclosure and short sale schemes, contributed to Nevada retaining its position as the state with the highest mortgage fraud risk in the country for the third consecutive year.

****>> The entire Chicago MSA saw a dramatic decrease in high-risk transactions in 2011, with its risk index value falling from 174 in the first quarter to 146 in the fourth quarter. Increased media and lender scrutiny of fraud in these geographies may have played a role in this dramatic change.

****>> Five of the six New England states experienced large changes in fraud risk between 2010 and 2011. Rhode Island, Massachusetts, and New Hampshire are among the four states with the largest risk decreases, while Vermont and Connecticut both experienced large increases in fraud risk. This dichotomy could be caused by the movement of fraudsters between neighboring regions as they identify areas ripe for exploitation. Maine remained in the five lowest-risk states.

****>> The rise in the Employment/Income Fraud Risk Index over the past two years is likely the result of the decline in house prices being outpaced by the decline in the income of working households combined with more stringent underwriting and documentation requirements.

****>> Loan applications for investment properties continue to have very high fraud risk compared with owner-occupied properties.

****“Keeping our guard up as risk profiles shift requires our industry to think as creatively as the criminals,” said Kevin Coop, president of Interthinx. “That’s only possible when lenders have access to the best data and analytics available. By identifying risky correlations, such as high employment/income fraud risk on loans to investors for high-value properties, or pinpointing geographic pockets of risk, we provide actionable intelligence that lenders can use to mitigate risk.”

**iServe Residential Lending**

***It’s all about return on investment. You don’t want to invest in a technology that won’t produce results. So, when PROGRESS in Lending hears good ROI stories we bring them to you. In this case, iServe Residential Lending, LLC a retail mortgage banker, has reported a dramatic increase in employee productivity, slashed technology costs, and reduced costs per loan since implementing origination system LendingQB. iServe selected LendingQB approximately a year ago because it eliminated having to use multiple platforms, databases and integrations. Here’s the story:

****“We were previously using three different systems that were technically integrated together, but they still had a number of issues,” said Michael Wilson, director of operations at iServe. “The system-to-system communication was poor, integrations often required employees to re-key data, and we had to call three different vendors when we needed technical support. This was hampering our operational performance.   We came to the conclusion that we needed to look for a single provider that could efficiently do the job of these three vendors.”

****During the diligence process, iServe was provided with the opportunity to test drive the LOS unencumbered from that of a traditional sales-guided demo, allowing the lender to run a loan through the entire LendingQB system from start to finish. Dubbed the ‘Guest Suite Invitation,’ lenders are able to work with the solution in an isolated environment to ensure it meets their specific needs.

****“Working successfully in LendingQB’s Guest Suite Invitation empowered us with the insight to ensure the platform would work for us,” said Wilson. “Immediately after implementing LendingQB, we were able to completely eliminate any re-keying of data, realize greater employee productivity via tighter workflows, and work towards being paperless in the same system. This reduces our cost per loan by an estimated 30% and optimizes every single area of our lending practice, from origination through secondary marketing and interim servicing. The improved communications and data integrity of being on one platform has substantially improved our operations.”

****“We don’t consider ourselves to be just another loan origination system (LOS) vendor that loosely uses the ‘end-to-end’ buzzword,” said Binh Dang, president of LendingQB. “We like to move away from this overused term and instead refer to our platform for what it really is — a seamlessly connected profit optimization system that is focused on the lender’s business first and foremost. The bottom line should be the bottom line. We advise our clients on how to develop their workflows to reduce cost per loan and increase productivity. That’s how we help clients ‘win the lending game’ in ways they never knew were possible.”

**Technology Can Help**

***How would you rank the appraisers that you do business with? Don’t know, let technology help. Platinum Data Solutions, a provider of collateral valuation technologies, has added a qualitative scoring function to its RealView automated collateral review platform. The system now automatically ranks each appraisal with a “low,” “medium” or “high” quality grade, based on the number and type of rule discrepancies found in each report. This at-a-glance scoring structure allows users to quickly and efficiently assign each RealView-analyzed appraisal report to the appropriate appraisal review level, whether a new or highly experienced staff member, in just a matter of moments.

****“With RealView’s qualitative scoring, lenders can make quicker loan decisions, prevent buybacks and reduce turn times,” said Phil Huff, CEO of Platinum Data Solutions. “Our customers can now take a look at a RealView report and know in an instant whether to assign that appraisal to a junior reviewer or someone with expertise in certain types of data evaluation. They can maximize their time and their skilled labor forces without sacrificing the quality of their decisions.”

****An increasing number of appraisal-related guidelines and regulations—along with their potentially costly fees, fines and repurchases—have created the need for lenders, servicers and investors to thoroughly review all appraisals on the loans they originate, service and purchase. Some organizations review each appraisal through manual processes, which can be time consuming and error-prone. However, more companies are using technologies that leverage automation to review appraisals with greater speed and accuracy.

****RealView subjects each report to a comprehensive review that covers over 2,000 USPAP (Universal Standards of Professional Appraisal Practices) and other industry appraisal review guidelines that include appraisal data points, as well as customized user-defined rules throughout all sections of the appraisal report. In contrast, without automation, the internal manual review processes could easily consume 30 minutes or longer. After completing its automated review, RealView provides a listing of discrepancies—potentially inaccurate, erroneous or fraudulent data points—found in the subject appraisal. Discrepancies are categorized into one of three categories: “blank field” discrepancies, which occur when a required field does not contain any information; “compliance-related” issues, where fields contain data that does not comply with USPAP and/or investor guidelines; or “checklist” issues, which indicate fields containing information that conflicts with the user’s specified criteria.

****“There’s no reason that lenders, servicers, investors and AMCs should sacrifice efficiency, cost-effectiveness, service or high quality for attaining compliance—and with RealView, they don’t have to,” said Huff.

**By Michael Hammond**

***Last week I started talking to you about an article called “8 Tips For Creating a Great Case Study” by kissmetrics. Why? Because in order to succeed in a time when the resources of every lender are stretched, you as a technology vendor, have to craft a compelling argument telling that lender prospect why they should spend even a penny with you. The saying: “Money doesn’t grow on trees” rings true these days. Lenders can’t afford to waste anything, least of all money. So, how do you get them to send with you? No. 1, you tell them about the successes that other lenders have had using your technology by writing a case study. Here are four more tips on how to make that case study effective:

****1. Talk Specific Strategy

****So you doubled a website’s traffic or sales, right? How did you do it? This is where you sell your products or services simply by saying which ones you used and how they led to the desired result. You shouldn’t just say “our online marketing services led to these results.” Instead, you should say “it was a combination of a three-month dedicated social media campaign focusing on Facebook & YouTube and five months of link building that led to an increase in rankings plus brand exposure that led to these results.”

****2. Try Different Formats

****While people like stories, case studies do not have to be fit into story form every time. You could try different types of case studies, such as an interview format where you have your clients answer the same questions mentioned earlier about what they do, their needs, their goals, and how you met them. Quoting your customer in their own words will make the case study even more relatable to your ideal customer than you telling the story.

****3. Appeal to Different Types of Learners

****While some people enjoy reading, others may prefer audio, video, or visual representation of your case study. So consider taking your text-based case studies and re-purposing the content as:

****>> A podcast

****>> A YouTube video

****Or even try an infographic. The bonus with YouTube videos and infographics is that they are easy to share. This means that your case study may go further than just your own site, leading to more of your potential customers finding out how they could benefit from your products or services.

****4. Make Them Easy to Find

****What’s the point of having great case studies if no one will ever read them? Be sure that your case studies are organized and easy to find.

****I hope these tips helped. Now go out there and use them to craft the best case study possible to both sell your solution and to also further the cause of automation in our industry.

**By Michael Hammond**

***Everyone is looking for results. Nobody can afford to throw away money or to leave an opportunity for savings behind. We all know this. But how do you hammer this message home? If you’re a technology vendor, you tell the unique stories of lender clients that have saved money and gained efficiency through expanded technology usage. The problem is that most technology vendors have not perfected the art of putting forth a compelling case about the real return on investment that lenders can expect as a result of automating. Here’s how vendors should tell this story:

****In an article called “8 Tips For Creating a Great Case Study” by kissmetrics, the authors suggest that a successful case study crafted by a vendor to talk about how other lenders have effectively used their technology should include:

****1. Write About Someone Your Ideal Customer Can Relate To

****Do you know who your ideal customer is? The goal is to ensure that once your ideal customer has read your case studies, they will feel:

****>> You are comfortable in their industry.

****>> You know their industry’s specific needs.

****>> You know how to give their industry targeted results.

****Think about it on a smaller level, such as when you’re reading a how-to blog post. Most of them are geared toward average readers. But when you come across a how-to post specifically designed for your needs (such as online marketing for the healthcare industry), then you are more likely to understand and apply the information. The same goes with case studies – people who read about results attained in their industry will feel like the same products / services will work for them as well.

****2. Tell the Story from Start to Finish

****People enjoy reading a story. A great case study will allow someone to really get to know the customer in the case study including:

****>> Who is the sample customer and what do they do?

****>> What were the customer’s goals?

****>> What were the customer’s needs?

****>> How did you satisfy those needs and help the customer meet their goals?

****A final thing you could do is simply follow up with the customer in the case study and update your case study a few months down the road to show how your products/services are continuing to have long term benefits for the customer. This would give readers the opportunity to see that your goal is not only to help with immediate needs, but also to ensure long term results.

****3. Provide Easy to Read Formatting

****No one really likes to read one huge chunk of text, no matter how interesting and informative it might be. Be sure to use good content formatting elements like you would with articles, blog posts, and copywriting on your website including:

****>> Headers

****>> Images

****>> Bulleted lists

****>> Bolded & italicized text

****In addition to providing great SEO value for your case studies page, these formatting elements will help your readers (especially those that like to skim) find the most important parts of your case study and get a great impression about what your business could do for them.

****4. Include Real Numbers

****Have you ever read case studies where a business states that they “doubled traffic” for the customer in their case study and wondered if that meant they went from 100 to 200 visits or 10,000 to 20,000 visits? Certain ways of displaying numbers can have an ambiguous meaning. You will want your case study to be as clear as day. So instead of just saying you doubled their traffic, show them real numbers and (if possible) real proof. Of course, remember that not everyone is as familiar with the technology as you are, so be sure to highlight what they should be noticing. This way, the reader can see where the customer began and where the customer ended up with your help. They can see real, tangible results. Plus having the picture proof can help the reader envision exactly what you might do for them, making the case study that much more powerful.

****We’ll continue this conversation next week as I share with you the remaining four tips. Stay tuned …

**By William E. King**

***The 2008 financial and housing market crash exacerbated the need for greater accountability and transparency in gauging the risk inherent in a property, and cautioned investors not to limit focus to consumer risk alone. As the economy grappled with the ramifications of the crash, there is no doubt that significant change was necessary for the U.S. finance and housing system to effectively recover.

****A major change came in the form of the Uniform Mortgage Data Program (UMDP) and its core initiatives UCDP, UAD and ULDD. UMDP was created by the government-sponsored enterprises Fannie Mae and Freddie Mac (GSEs) under the direction of their regulator, FHFA, to enable the GSEs to capture consistent data, drive improved loan quality and manage risk effectively. It does so by developing and implementing uniform appraisal and loan delivery data standards, and a joint appraisal data delivery system allowing the GSEs to evaluate clear and meaningful data about the property pre-delivery, which had not been previously available.

****This initiative marks the first time in recent history that an effort of this magnitude has been implemented to reform the U.S. housing finance system. The scope of UMDP marks a cornerstone for success in continuing to positively evolve the U.S. finance and housing markets. It calls to mind such noticeable housing system shifts as the creation of the GSEs themselves or the subsequent creation of the mortgage-backed securities market.

****March 19, 2012 marked a significant milestone as UCDP was effectively implemented, requiring all lenders to electronically submit UAD-compliant appraisal reports for conventional mortgages delivered to the GSEs. This effort took just 22 months from introduction to mandate, which equates to moving mountains in the mortgage world in a relatively short timeframe, especially when one considers the vast and fundamental changes which had to first take root. Beginning with the process of information gathering and working with appraisal software providers and educating appraisers and lenders alike, it is clear the change was significant and one can only assume has come with a unique set of challenges.

****The current discussion is centered on how this change, now fully implemented, will evolve within the GSEs and how the lenders and other affected appraiser/appraisal service providers will adapt their business to maximize the benefits intended under UMDP. Questions remain such as, “As the industry moves toward total adoption of XML, will PDFs continue to be relevant;” and “How will the availability of standardized data in such greater quantity impact the way the mortgage industry moves toward recovery”? These questions and others prevailing in the industry all seek to encourage the further understanding of UMDP and its core initiatives as the industry forges ahead. Join us at the 2012 Predictive Methods Conference June 4-6 in Southern California to discuss UMDP’s implementation and projected evolution in greater detail.

***What’s the difference between loan quality and loan quantity? Find out here. Our Straight Talkers Roger Gudobba and Kelly Purcell discuss the new subprime. Also, MortgageFlex details how integrations can enforce loan quality. Further, Michael Hammond schools you on how to craft a better presentation. Lastly, Tony Garritano breaks down the latest trends.

www.youtube.com/watch?v=mVA553YwgQw

**Fahe Profiled**

***REO Allegiance, a property preservation firm, has been chosen to provide property preservation services to the home finance division of an affordable housing federation dedicated to helping low income families in the Appalachian mountains find and finance affordable housing. JustChoice Lending is the mortgage division of Fahe, an alliance of community leaders creating investment strategies that generate social, environmental, and financial returns. Here’s the scoop:

****REO Allegiance is providing the firm with a full range of foreclosure and rental property services including maintenance, vacant property registration, repairs, inspections and special project support.

****“We’re proud to be working with and supporting the efforts of this important organization,” said Lisa Sadaoui, CEO of REO Allegiance. “Organizations like Fahe and its members are rebuilding this country by purchasing, repairing and repurposing homes for low-income families in underserved areas. We’re happy to lend our experienced property preservation experts to that task.”

****JustChoice Lending offers homeowners a number of financing options and has thus far made more than $18 million in mortgage loans to 225 families in the region since its launch in 2007. It is just one of Fahe’s vehicles for reaching 6,400 families in need every year.

****“Fahe and its members are helping to rebuild local economies by creating jobs building and repairing energy efficient homes” said Fahe President Jim King. “Working with REO Allegiance lets us focus on what we do best and rest assured that our assets are being well managed.”

**New Report Highlights Fraud Increases**

***Interthinx has released its annual Mortgage Fraud Risk Report, which highlights some of the most significant mortgage fraud risk trends based on analysis of loan applications processed in 2011 by the Interthinx FraudGUARD system. According to the report, the Employment/Income Fraud Risk Index rose 14 percent during 2011 and has been on an upward trend for more than two years for a total increase of more than 45 percent. The Employment/Income Fraud Risk Index is particularly high for investor loans with an index of 310, which is almost three times the overall index value of 111 and is highest for high-value properties. Here’s what else the research found:

****More detailed points highlighted by Interthinx analysts include the following:

****>> The fraud hot spots for 2011 are very similar to those observed in 2010. The top six states with the highest overall levels of mortgage fraud risk in 2010 were again the riskiest six states in 2011. Mortgage fraud risk remained consistent from 2010 to 2011 in the Metropolitan Statistical Areas (MSAs) as well, with 16 of the 20 riskiest MSAs repeated from the previous year. This alarming degree of persistence suggests that it is going to be a long road back for these MSAs and states. They are all experiencing high levels of foreclosure activity, and the predominant mortgage fraud schemes center on distressed borrowers and properties.

****>> Nevada has the highest mortgage fraud risk in the nation, with a risk index value at 245, which is 99 points higher than the national mortgage fraud risk index of 146. Over the last eight years, Nevada has experienced a cycle of fraud leading to an artificial boom followed by a devastating bust resulting in the largest house price declines, unemployment rates, and foreclosure rates in the nation. High fraud risk, associated in particular with foreclosure and short sale schemes, contributed to Nevada retaining its position as the state with the highest mortgage fraud risk in the country for the third consecutive year.

****>> The entire Chicago MSA saw a dramatic decrease in high-risk transactions in 2011, with its risk index value falling from 174 in the first quarter to 146 in the fourth quarter. Increased media and lender scrutiny of fraud in these geographies may have played a role in this dramatic change.

****>> Five of the six New England states experienced large changes in fraud risk between 2010 and 2011. Rhode Island, Massachusetts, and New Hampshire are among the four states with the largest risk decreases, while Vermont and Connecticut both experienced large increases in fraud risk. This dichotomy could be caused by the movement of fraudsters between neighboring regions as they identify areas ripe for exploitation. Maine remained in the five lowest-risk states.

****>> The rise in the Employment/Income Fraud Risk Index over the past two years is likely the result of the decline in house prices being outpaced by the decline in the income of working households combined with more stringent underwriting and documentation requirements.

****>> Loan applications for investment properties continue to have very high fraud risk compared with owner-occupied properties.

****“Keeping our guard up as risk profiles shift requires our industry to think as creatively as the criminals,” said Kevin Coop, president of Interthinx. “That’s only possible when lenders have access to the best data and analytics available.”

**By Tony Garritano**

***At least twice a year, more so these days, I hear about a big mortgage technology acquisition. Quite frankly I was expecting to hear about more these past few years given market conditions, but I’ll be sure to keep you posted on what I know when I can. As I look at these deals I think some times that deal was great and it made perfect sense. However, some times after the deal is done there’s poor execution in making that acquisition a value add for the industry as a whole. I’m happy to say that this one acquisition done last year made perfect sense to me and I just heard today that the acquiring company’s ability to turn that deal into a win for the industry has now happened as well. Here’s the scoop:

****Following the acquisition of Loan-Score Decisioning, Calyx Software has launched the Calyx Decisioning Systems suite of products. LoanScoreCard provides competitively priced FHA Total Scorecard access directly through the Calyx Point tool as well as through other loan origination systems (LOS). The Calyx Decisioning Systems is a suite of automated underwriting and pricing products designed to help you determine a loan’s eligibility and pricing within investor or FHA guidelines. Fully integrated with Point, the decisioning system saves time, reduces cost, and improves the quality of each loan’s eligibility decision with a complete analysis of borrower’s loan and credit information against multiple standard or custom programs.

****Dennis Boggs, EVP of Business Development for Calyx Software says,”We are proud to announce LoanScoreCard, which provides universal access to FHA TOTAL Scorecard, for everyone in the mortgage industry. The beauty of LoanScoreCard is that it offers improved, user-friendly findings, and saves money on underwriting at the same time. Everyone can access to LoanScoreCard no matter what loan origination system they’re using. And if they are Calyx users they can access LoanScoreCard from inside Point.”

****LoanScoreCard is a HUD-approved automated underwriting system (AUS) that determines a loan’s eligibility for FHA insurance. The tool provides a detailed FHA Findings Report with decision from TOTAL and LoanScoreCard underwriting, along with set of HUD-approved messaging. LoanScoreCard is available via Calyx Point, standalone web access, or web services.

****LoanScoreCard is one of few programs approved by HUD for TOTAL Scorecard and it offers the same user-friendliness with which Calyx products have always been credited. Calyx users can order their low-cost findings directly through Calyx Point and store them in the electronic document management system for transparent access at any time. LoanScoreCard is also easily accessible at www.loanscorecard.com and can be exported to any LOS.

**By Tony Garritano**

***We all know a lot of good people that are out of work. It’s sad really. I laugh when the media say we’re doing so much better because unemployment is down to 8.3%. Is 8.3% unemployment recovery? I don’t think so. The good news is that if you’re an experience lending executive, you can get employment. There is a premium for people who “know” this business. Let’s face it, if you don’t know anything about mortgage lending, how can you fix the business? You can’t. Case in point, here a few recent hires that demonstrate that experience matters:

****Specialty servicer Wingspan Portfolio Advisors has announced that Ed Delgado will join the company as chief operating officer, effective April 2, 2012. Formerly CEO of the Five Star Institute, SVP of Wells Fargo and executive at Freddie Mac, Delgado has more than 20 years of experience in mortgage banking and is widely recognized as a thought leader and innovator in the industry.

****While at Five Star, one of the nation’s largest trade groups, Delgado led various industry initiatives and hosted discussions with former President George W. Bush, New York Mayor Rudolph Giuliani, First Lady Laura Bush and U.S. Secretary of State Condoleezza Rice. He pioneered the formation of the Lender Leadership League, a consortium of the nation’s top mortgage-servicing executives. Prior to joining Five Star, Delgado was SVP of government and industry relations at Wells Fargo, where he played an integral role within the company’s servicing and default group and served as a leader in the mortgage community, government agencies and industry trade groups in Washington, D.C. While serving as a key representative to the U.S. Department of the Treasury and in conjunction with industry leaders, Delgado was supportive of the Obama and Bush administration’s efforts to develop mortgage solutions designed to stem the increasing number of home foreclosures in the United States.

****Also, Appraisal Logistics, a compliance risk management firm, named Dennis H. Ashcroft vice president, sales and marketing. In this position, Ashcroft oversees Appraisal Logistics’ business and sales strategy, marketing efforts and growth initiatives. He serves as the foremost expert on all ongoing sales initiatives within the company, as well as oversees the customer experience for the company’s nationwide client base and appraisal network.

****With nearly 30 years of experience in the financial industry, including co-founding and managing a federal credit union, Ashcroft brings a unique perspective to Appraisal Logistics. His vision will play a key role in the company’s continued expansion in the bank, credit union and mortgage lending market.

****Lastly, Axis Appraisal Management Solutions announced the addition of Janice Bezou, SRA, as the Director of Vendor Management and Lender Services. Ms. Bezou brings more than 25 years of appraisal management as well as asset and risk management experience to Axis. She spent more than 16 years with a top tier national bank, managing residential appraisal departments and assisting in corporate valuation risk management. She was also Chief Appraiser for Service Link, Fidelity’s National Lending platform. Ms. Bezou was most recently Director of Appraisal Services for Bay Equity Home Loans in San Francisco. She holds the SRA designation from the Appraisal Institute and is a Certified Appraiser in California.

****Why was Ms. Bezou and the other executives mentioned hired? “Axis is entering a new phase in its level and range of services for our lender partners and Ms. Bezou’s deep background in risk management, reo decision making, repurchase negotiations, and extensive industry- wide relationships assures our clients of the gold standard within the suite of new services they can anticipate from Axis,” answered Michael Simmons, SVP of Business Development. “In addition, our expectations of, and support for, our elite appraiser panel will flourish even further under Ms. Bezou’s tutelage.”

****Experience matters.

**New Data Emerges**

***Veros Real Estate Solutions has released its VeroFORECAST real estate market forecast for the 12-month period from March 1, 2012 to March 1, 2013. The quarterly report shows that the recovery in the housing market is forecast to accelerate. The national home price index (HPI) forecast improved significantly from last quarter’s 1.3 percent depreciation to this quarter’s slight depreciation of 0.85 percent. Here’s the scoop:

****VeroFORECAST shows fewer significant drags across an increasing number of markets, many of which are beginning to emerge with initial signs of appreciation for the first time since the market’s decline. On a national level the gradual recovery in house prices is finally forecast to start accelerating, although the forecast projects the recovery to be market-by-market with not all areas expected to do well. Unemployment and housing supply remain key discriminators between the top and bottom 10 markets.

****Phoenix is predicted by VeroFORECAST to be the top performing market with a forecasted five percent appreciation. Its revival is based on the drastically reduced housing supply, great affordability and low interest rates. Also creating demand is Phoenix’s 7.9 percent unemployment rate, which is less than the national rate of 8.3 percent.

****For the third consecutive quarter, Bakersfield, Calif. stands at the bottom of the housing market with depreciation of 6.3 percent, which is a slight improvement from 6.8 percent in the previous quarter. Unemployment is at 14.3 percent and although housing inventory is coming down, the market is still experiencing a high rate of foreclosure and mortgage delinquency which continues to keep the pressure on pricing.

****The strongest areas in the United States can be still be found in the Great Plains, including regions in North Dakota, Texas, South Dakota, Nebraska, and Louisiana. Housing markets that continue to perform well and see improvement include regions in Washington D.C., Hawaii, and Alaska. Although not ready yet ready to crack the top ten, hard hit housing markets in Florida are starting to see signs of appreciation.

****Inland California and Nevada markets make up seven of the top bottom 10 markets. Recoveries in these areas will be a long time in coming due to extremely high unemployment rates that vary between 11 and 16 percent, as well as high foreclosure and mortgage delinquency rates. Additionally, Chicago, Philadelphia and Seattle are three big cities not expected to fare well in the next year.

**By Tony Garritano**

***I’m a cheerleader when it comes to talking about paperless processing. So, anytime I hear about vendors making it easier for lenders to go paperless I have to share that news with you. Today I learned that ProLender Solutions, Inc., a paperless lending software, has a new electronic file delivery integration with Provident Funding. The interface allows lenders to simplify and accelerate the file delivery process through a fully integrated ImageCenter. Here’s the full story:

****“Provident Funding is excited to have a full integration for image file delivery completed with ProLender,” said Eric Wilson, Director of Correspondent Operations at Provident Funding. “The integration process was the smoothest we’ve had with any vendor due to ProLender’s exceptional programming response time and approach to a customized solution.”

****From within ProLender’s ImageCenter, the user clicks a button to transmit the investor package directly to Provident Funding. ImageCenter intuitively selects the required images, generates the investor package and uploads it into the Provident Funding system. Within seconds a confirmation is returned to the user when the upload is complete.

****“By integrating imaging file delivery to Provident Funding, ProLender clients now have the ability for point and click loan delivery from their computer,” said Kevin Roczey, President at ProLender Solutions, Inc. “No more wasted paper, wasted time at the copy machine or expensive overnight packages.”

****The interface provides flexibility and speed for the delivery of the investor file. Users may upload the full investor package or send individual documents as needed.

**By Tony Garritano**

***I’ve had the great pleasure of knowing a lot of people in this space. I’ve made lasting friendships. I have a lot of respect for the visionaries in this space. One of those people is Liz Green. She’s spirited. She’s knowledgeable. She’s passionate. And when the appraisal group within MISMO needed a leader she stood up. So, when I found out about what she’s up to now I had to share it with you. Here’s the scoop:

****Elizabeth Green, an industry expert in valuation technology and data has launched a new consultancy aimed at helping lenders and appraisers work together more effectively to meet the challenges of today’s market. Green, a frequent industry speaker and an advocate in data standards, entered the mortgage industry in the early 90s and has spent most of the last decade working in the valuation space for some of its most successful companies.

****“I am excited to be in a position in which I can offer my expertise and perspectives to a broad spectrum of industry participants to achieve a higher good,” Green said. “Having worked for many of the technology firms across the origination, servicing and settlement services segments, I’m in the perfect position to help lenders make sense of the divergence of regulations and market influences impacting their valuation requirements and, at the same time I can help appraisers become more successful in a rapidly changing profession.”

****Green says she brings a bit of art to her work, explaining that it’s not all about the science when it comes to helping professionals with very different viewpoints work together effectively.

****“Not just as an industry but as a society, we face unprecedented challenges in residential real estate. We must find improved ways to assess and manage collateral risk and property valuation. Our communities and our economy depend upon it,” Green said.

****I can’t agree more!

**First Bank Mortgage Profiled**

***First Bank Mortgage of Augusta, GA, a division of First Bank of Georgia, has selected Ellie Mae’s Encompass360 loan origination system (LOS) as its mortgage management solution. In 2011, First Bank Mortgage originated more than $400 million in mortgages through its retail branches and 60 correspondent lenders. So, if the bank was doing so well why did it switch its LOS. Here’s the story:

****Prior to selecting Encompass360, First Bank Mortgage had been using multiple systems, which made it increasingly difficult for their wholesale correspondent lending clients to do business with them. Third-party origination (TPO) lenders generated approximately 60 percent of First Bank Mortgage’s total volume in 2011 and are expected to account for roughly the same level of volume this year, according to the company. For more than six months, First Bank Mortgage evaluated various loan origination systems (LOS) before ultimately selecting Encompass360.

****“Every shop is different and has different needs. Ellie Mae understands this and Encompass360 allows users to set the system up in the best possible way for them,” said Thomas Bird, First Bank Mortgage’s executive vice president and a former president of the MBA of Georgia. “For us, this meant implementing a system that will make it easier for our TPO clients to do business with us online and to do it paperlessly. Encompass360 also enables us to customize our business rules to enhance compliance, which is a big issue for us. It also comes with a pricing engine, which saved us the cost of buying and integrating one.”

****Mr. Bird estimates that Encompass360 will produce at least $200,000 in hard-cost savings in the first full year, following implementation. “That’s not counting intangibles like higher productivity, increased business, improved customer service or the cost savings of preventing mistakes that could lead to compliance penalties or buybacks.”

****To build excitement for the new platform, First Bank Mortgage is creating and distributing t-shirts with Ellie Mae’s Encompass360 logo when they kickoff their new system on April 1. Mr. Bird said, “This is a big deal for us and we expect to save a significant amount of time and money. But going through a system change, even if it goes smoothly, is still stressful for our employees. So, we thought it would be a good idea for them to wear the t-shirts and blue jeans one day and have some fun with it.”

****“We have never had a client so excited about launching Encompass360 that they wanted to create t-shirts,” said Jonathan Corr, Ellie Mae’s chief operating officer. “But I can understand why. First Bank Mortgage’s move from multiple software systems to a complete, enterprise solution will give them more control, allow them to more efficiently manage loan officers and correspondents, and be more nimble when handling compliance, market and technology issues as they evolve. At the same time, they’ll have greater confidence that they are originating quality assets.”

**New Data Emerges**

***It seems unlikely that the mortgage industry can fully recover until we work through all of the shadow inventory. And new data shows that may take more time. CoreLogic, a provider of information, analytics and business services, reported today that the current residential shadow inventory as of January 2012 was 1.6 million units (6-months’ supply), approximately the same level reported in October of last year. On a year-over-year basis, shadow inventory was down from January 2011, when it stood at 1.8 million units, or 8-months’ supply. Currently, the flow of new seriously delinquent (90 days or more) loans into the shadow inventory has been offset by the roughly equal flow of distressed sales (short and real estate owned). Here’s the full industry findings:

****“Almost half of the shadow inventory is not yet in the foreclosure process,” said Mark Fleming, chief economist for CoreLogic. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”

****“The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements. In some hard-hit markets the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows,” said Anand Nallathambi, president and CEO for CoreLogic.

****CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent, in foreclosure and real estate owned (REO) by lenders. Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed non-listed properties most likely to become REO properties. Properties that are not yet delinquent, but may become delinquent in the future, are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official metrics of unsold inventory.

****Data Highlights Include:

****>> As of January 2012, shadow inventory remained at 1.6 million units, or 6-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or REO.

****>> Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in REO (1.6-months’ supply).

****>> Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.

****>> The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.

****>> Despite 3 million distressed sales since January 2009, the period when home prices were declining at their fastest rate, the shadow inventory in January 2012 is at the same level as January 2009.

****>> The shadow inventory is approximately half of the size of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows.”

****>> The segment of borrowers that were 60+ days delinquent in the past but were “cured” and are now current on their payments is increasing. This figure was 7.2 percent in January 2012, up from 5.7percent a year ago.

****>> The total percent of borrowers who were ever 60+ days delinquent (irrespective of delinquency status today) increased to 15.5 percent in January 2012, up from 14.3 percent a year ago.

****>> The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000 (Figure 5). More importantly while the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and is up 3 percent from a year ago.

**Website Gets Major Kudos**

***Arguably the biggest problem that the mortgage industry faces is the foreclosure crisis. There has to be a better, faster, easier way to workout troubled loans and foreclose on loans that can’t be worked out. That’s where technology can play a role and it has. The National Mortgage Settlement (Settlement) announced last week and filed in federal district court by the Department of Justice, the 49 state attorneys general, and the five largest mortgage servicers, mentions Hope LoanPort (HLP) as a model for a neutral, national Web-based portal to facilitate compliance with the Settlement. HLP is a non-profit 501(c)(3) based in Washington, D.C. Here’s the scoop on why this matters:

****The landmark Settlement requires, among other new servicing standards, that the five mortgage servicers develop a portal that allows homeowners to submit and check the status of their foreclosure-alternative applications. The Settlement also mandates that other stakeholders, specifically, housing counselors who are working with homeowners, shall have access to a similar portal to be used to submit applications and to communicate with mortgage servicers. HLP was mentioned as a model portal in each of the separate consent orders filed in district court.

****Since its creation in 2009, HLP has been the prototype for a collaborative, multi-party, Web-based transactional platform focused on foreclosure prevention. Its mission is to provide transparent, efficient and traceable access to foreclosure-alternative options while ensuring homeowner information is securely and confidentially shared among key stakeholders such as housing counselors, mortgage servicers and homeowners. This efficiency helps everyone make informed, meaningful, and timely decisions that ultimately better serve homeowners at risk of, or in, financial distress.

****HLP has successfully worked with the housing counseling community and the mortgage servicing industry to agree upon a standard set of data and document requirements that allow consumers to apply for foreclosure alternatives. HLP has relationships with 14 mortgage servicers, including the five mortgage servicers who agreed to the Settlement. These servicers manage over 80% of the mortgages serviced in the United States. HLP is also working with over 700 HUD-Approved/National Foreclosure Mitigation Counseling (NFMC) certified Housing Counseling Agencies with over 3,800 individual housing counselors in 50 states, Washington, D.C. and Puerto Rico.

****Camillo Melchiorre, President and CEO of HLP stated, “Hope LoanPort is proud to be mentioned in the National Mortgage Settlement and looks forward to working with the mortgage servicing industry, as well as the regulatory and housing counseling communities to better address the needs of homeowners.”

****You see, technology can make a big difference.

**By Tony Garritano**

***Some think being innovative means that you completely reinvent the wheel. I’m here to tell you that’s not the case. Some profound innovations drew from and improved on existing technology in a new way. What do I mean? For example, PROGRESS in Lending has learned that Coester Appraisal Group, a nationwide provider of appraisal management technology and services, has launched Cloud Control, a revolutionary new appraisal management technology. Cloud Control is appraisal management software built on the award-wining platform of Salesforce.com, which Forbes magazine designated as the most innovative company in the world in July 2011. Here’s the scoop:

****Cloud Control enables lenders to customize their appraisal processes far beyond the levels offered by other appraisal management technologies. Cloud Control offers virtually limitless customization—users can create business rules to automate virtually any function, from protecting standards through firewalls and safeguards, to business-unique sales and marketing activities that help companies generate new business in addition to enhancing compliance and efficiency.

Coester is providing Cloud Control completely free of charge to all lenders—Coester customers and non-customers alike—without obligation to use any additional Coester valuation service, whatsoever.

Cloud Control is a cloud-based, end-to-end appraisal management technology that efficiently manages the entire appraisal cycle. In addition to automating functions and tasks ranging from relaying the initial request to the lender’s desired appraisal panel to filing and storing the completed report, the system automatically extracts and converts data into UCDP-compliant formats and submits appraisal data through the Uniform Collateral Data Portal (UCDP). Cloud Control provides the property value as estimated by an automated valuation model (AVM), provides reviewers’ notes for every appraisal report, and verifies that the appraiser and property adhere to industry requirements by cross-checking resources like ASC.gov, FHA Connection and FEMA.

Cloud Control can be configured to accommodate virtually any business rules. It automatically verifies appraiser licensing and certification and cross-checks appraisers against investor “black lists,” in addition to offering extensive customer relationship management functions. The system is set up to stay up-to-date and adhere to all investor, local, state and federal guidelines and regulations. Because it is cloud-based, it is ready to use and can be set up in as little as 20 minutes—about the time required to merely add a new appraiser to the user’s appraiser panel with most other appraisal management systems.

“As an AMC, we had tried most of the appraisal management software on the market and we couldn’t find one with anywhere near the customizability we need, so we built Cloud Control,” said Brian Coester, CEO of Coester Appraisal Group. “Other technologies claim customizability but only offer minimal configurability. Cloud Control can be configured to do virtually anything you want—all the way down to the actual user level.”

Cloud Control is the only appraisal management technology that utilizes the Salesforce.com platform and provides virtually the same power and flexibility offered by Salesforce.com’s customer relationship management (CRM) software, Sales Cloud, a technology specifically designed to make it faster and easier for companies to connect with and service their customers, and to do so in a way that promotes high service levels and increased sales. With Cloud Control, users can fully automate the appraisal status notification and escalation processes at the user level, which means that users can automatically receive key information on customers and vendors, based on any trigger—such as a phone call—in real time. The system can also be set up to send custom email messages to specified groups. For example, certain property owners can be contacted with marketing messages when specific triggers are activated, like each time rates reach a certain threshold.

“Appraisal management technologies have missed numerous opportunities to proactively help lenders grow their business,” said Coester. “We’re changing that. Cloud Control is the first system that not only helps maintain compliance and efficiency, but also helps increase business and generate revenue. Plus, unlike other systems that can cost tens of thousands of dollars, Cloud Control is available for zero cost whatsoever—for as long as the lender wants to use it.”

**Seamless MI Integration**

***Mortgage Guaranty Insurance Corp. (MGIC), the nation’s largest private mortgage insurer, now has the availability of mortgage insurance rate quotes to lenders through the product and pricing engine piece of MarksmanLMP, from Mortech, Inc. The integration marks the first of a series of interfaces, with eligibility and MI-ordering forthcoming. Here’s the full story:

****MarksmanLMP’s mortgage insurance function is set up to automatically trigger when a loan scenario exceeds the 80% loan-to-value (LTV) threshold. The MISMO-based integration allows MarksmanLMP users to seamlessly check MGIC’s pricing without having to leave the platform. Lenders receive initial mortgage insurance rate quotes at the corporate and/or branch levels that can be dynamically adjusted according to specific loan scenarios. This fully automated two-way exchange of data provides mortgage lenders with a more efficient lending strategy, which enables a faster loan closing process and increased profitability.

****“Seamless access to MGIC’s competitive mortgage insurance rates through MarksmanLMP enables our customers to streamline their loan origination processes,” said Sal Miosi, Vice President of Marketing at MGIC. “MGIC’s partnership with Mortech is another example of our commitment to providing our customers with efficient technology.”

****“Automating more of the process of originating a loan is critical to making the loan officer of the future more efficient and effective, for both the mortgage company and the homeowner,” said Don Kracl, President of Mortech. “This is another step forward for the industry and one less thing loan officers need to worry about as they go about the business of serving American borrowers.”

**Help For Smaller Banks**

***PROGRESS in Lending has learned that String Real Estate Information Services, a consultancy and back-office service provider to the U.S. home finance industry, has added capacity in preparation to help smaller mortgage lenders capitalize on the government’s recently announced Home Affordable Refinance Program (HARP 2). As many as 6 million homeowners may qualify to refinance existing mortgages under the program but experts say smaller institutions could benefit the most. Here’s the whole story:

****Research performed recently by FBR Capital Markets analysts predicts that the biggest beneficiaries of the HARP 2 program are likely to be smaller originators, if they are well positioned to pick up market share. Unfortunately, these smaller firms are the ones that are likely to need the most support to take on this additional volume.

****“Helping these originators find qualified borrowers, contact them with offers, underwrite and process their applications are exactly the types of tasks that our team has been built to handle easily,” said Prashant Kothari, chief executive officer for String Real Estate Information Services.”

****String has enjoyed phenomenal growth over the past 2 years and has been expanding into new markets and extending its footprint within the U.S. real estate industry. The company has been particularly successful in building capacity for title industry outsourcing. Kothari said String identified the HARP 2 opportunity last fall and has been working to build capacity since then. The company is taking on new clients for HARP 2 services now.

**A New Chief Executive Takes Charge**

***Lenders One, a national alliance of community mortgage bankers, correspondent lenders and suppliers of mortgage products and services, has named Jeffrey R. McGuiness as its new CEO. McGuiness assumes this position after former CEO and co-founder, Scott Stern, announced last month he would leave the company to pursue other entrepreneurial opportunities.

****McGuiness has more than two decades of experience in the financial industry, with particular emphasis in building correspondent, retail and direct to consumer operations. Most recently, McGuiness was executive vice president of consumer banking and originations at St. Louis-based Aurora Bank, managing the bank’s consumer deposit and mortgage business units. Prior to joining Aurora, he was executive vice president of direct-to-consumer lending at American Home Mortgage. McGuiness also was with CitiMortgage for seven years in multiple senior management positions, including managing director of correspondent lending.

****“I am confident that Jeff’s extensive experience in mortgage operations will serve him well as he guides Lenders One into the future,” said departing CEO Scott Stern. “Jeff will build on the success of Lenders One and constantly strive to find new and innovative ways to offer our members the services and products they need to succeed.”

****After a thorough search, McGuiness was selected based on his comprehensive industry experience and demonstrated leadership skills. “I cannot think of a better choice than Jeff to lead Lenders One through these complex and challenging times,” said Lenders One Advisory Board member Stephen M. Calk, Chairman and CEO of Kansas-based National Bancorp Holdings, a member of the cooperative. “The combination of his correspondent, retail, investor, secondary market and regulatory experience is unparalleled. Jeff’s leadership experience and acute understanding of the needs of our members and the demands of today’s investors will be critical to the success of our cooperative now and in the future.”

****Lenders One was established in 2000 as a national alliance of mortgage bankers, correspondent lenders and suppliers of mortgage products and services. The St. Louis-based company originated more than $106 billion in mortgages in 2011 and is ranked as one of the largest retail mortgage originators in the U.S. Its mortgage productivity system additionally allows members to close more loans, satisfy continuing education requirements and market themselves more powerfully. Lenders One, now more than 220 lender members strong, is a subsidiary of Altisource Portfolio Solutions S.A.

**By Tony Garritano**

***It always seems to me like there are too many loan origination systems to choose from. How do they all survive? In the end, I guess, they all have their unique strengths and weaknesses. To this end, PROGRESS learned a few months back of a new entrant that hopes to put their spin on this already crowded space. Now they’re staffing up to try and take the market by storm. Here’s the full scoop:

****LendingQB, an enterprise-class end-to-end Web-based LOS), has added Holt Crowder and Brian Smith to its business development team. Both new hires will be dedicated to introducing the new LendingQB LOS to the mortgage industry.

****“We are excited about Holt and Brian joining our team to help launch the LendingQB platform,” said Binh Dang, president of LendingQB. “We’ve spent the last couple of years operating in an R&D mode to engineer a one-of-a-kind end-to-end LOS that delivers functionality and value above and beyond anything that is commercially available on the market today. Holt and Brian will play a major role in demonstrating to lenders why our enterprise-class LOS is unlike any other. Their knowledge and experience working in the mortgage technology space is why we brought them on board; I’m confident they’ll be major contributors to our growth.”

****Holt will be responsible for managing new opportunities with banks, credit unions and lenders in an outside sales capacity. Holt brings more than 20 years of experience to LendingQB having worked at mortgage banks, mortgage technology providers and as a consultant. He has held various positions at Loan-Score Decisioning Systems, Mortgage Cadence, Portellus, PCLender, Paramount Residential Mortgage Group, Aames Home Loans, NovaStar, PHH Mortgage and others.

****Brian will manage the upfront sales process working with prospective clients to communicate LendingQB’s value proposition. He has experience working at mortgage technology providers Loan-Score Decisioning Systems and LoanSifter. While at Loan-Score, Brian was instrumental in building a book of business that grew the company’s client base at a rapid rate, which helped make it attractive for acquisition by Calyx Software, Inc. in 2010.

****LendingQB was in development and testing for several years, and is now being successfully implemented at mortgage banks that are realizing enterprise-wide efficiencies and greater profitability. The platform was officially launched in December of last year and has experienced a significant amount of attention as a result of its unique features and capabilities. I’ll keep you posted on their industry penetration as I get that news.

**By Tony Garritano**

***Too often technology is dismissed. While others may think a provocative headline constitutes sexy and breaking news, I think a sexy headline is all about showing the real value of technology so lenders reading this column can share in that success. Nonetheless, some lenders say things like: “That’s too futuristic for me”. “That technology is too new and untested”. “I can’t invest in any technology unless it has a clear return on investment”. While some lenders reflect this view, others are investing in technology and reaping the benefits. One huge benefit that technology can bring a lender, beyond the obvious ironclad compliance, hard savings and efficiency, is intangible. What am I talking about? I’m talking about using technology to create a genuinely better experience for the borrower. Customer service matters. For example, PROGRESS in Lending has learned that Supreme Lending, a Dallas-based nationwide mortgage banker with branches throughout the U.S., reports that it has achieved a 98% satisfaction rating among its borrower customers during the second half of 2011, according to a customer survey completed by 86% of its customers. Here’s how Supreme achieved these numbers:

****The company, which also reduced closing times during the same period, attributes its high satisfaction ratings to the customer service initiative that the company put into place last year to support its plans for growth in 2012. The survey required customers to rate their overall experience with Supreme Lending by selecting one of five options: (1) very satisfied, (2) satisfied, (3) neither satisfied nor dissatisfied, (4) dissatisfied or (5) very dissatisfied.

****“Our customer-focused infrastructure is a key component of our vision, which is to become the best retail mortgage banking company in America—it’s also the foundation that supports the aggressive growth we have planned for 2012,” said Scott Everett, president of Supreme Lending. “One of the reasons we’re able to recruit and maintain such high level loan originators is because we have an active commitment to customer satisfaction. Both our processes and technologies are designed specifically to help build and sustain long-term customer relationships.”

****Supreme Lending previously implemented customer-focused initiatives that include underwriting, closing and funding loans in-house, and creating several state-of-the-art proprietary technologies. Both of these initiatives help provide borrowers with a smoother, more streamlined experience throughout the entire cycle of the mortgage, as well as significant cost savings. And based on the results of their survey, that investment in technology has paid dividends in terms of increasing overall customer satisfaction.

**By Tony Garritano**

***As I always say, cool technology for the sake of having cool technology is not a winning strategy. You have to invest in cool technology that solves a real issue that your business faces. The technology has to be relevant to you. As we talk more and more about foreclosures and defaults, the topic of short sales keeps coming up. I think any technology to make short sales easier is very relevant, which is why when I heard about what Wingspan Portfolio Advisors is doing, I was compelled to tell you about it. They’re staying ahead of the curve and really trying to address the issue of doing more timely short sales. Here’s what this specialty servicer is up to:

****Wingspan Portfolio Advisors, a Dallas-based diversified servicing company, and WREN, the Wingspan Real Estate Network for agents and brokers, have launched the Wingspan Commander, a full-featured short sale technology and service platform for real estate professionals. Powered by Elk Software’s easy-to-use, award-winning transaction management technology, Short Sale Commander, this new initiative empowers real estate agents, brokers and franchises with fast, professional, full-service short sale facilitation, negotiation and closing services nationwide.

****Wingspan’s WREN affiliate has been offering short sale facilitation to the real estate community since commencing operations in 2011. The addition of the Wingspan Commander technology provides new levels of transparency, communication and ease of use for busy real estate professionals, saving them tremendous time and effort while increasing short sale success.

****As part of the new collaboration with Short Sale Commander, Wingspan will also offer access to the Wingspan Certified Short Sale, a pre-contract review service that identifies potential obstacles earlier in the process than in ordinary short sale transactions. With its Certified Short Sale and loan servicing expertise, Wingspan is able to accelerate the short sale process up to 50 percent faster than industry averages, benefiting all parties to the transactions.

****“As an industry, agents and homeowners often wait for weeks and months only to find out that a short sale file has been declined by a servicer based on an issue that could have been identified and remedied earlier in the transaction,” says Chris Plummer, Wingspan Portfolio Advisors vice president and managing director of WREN. “Wingspan’s experience with servicers, investors and mortgage insurance companies allows us to identify these issues and assist the homeowner and agent in resolving them before an offer is submitted.”

****Short Sale Commander was created by Michigan-based Elk Software to streamline short sale processing for real estate agents and brokers.

****“By adding a full-service component to our existing platform, we have now extended our offering to potentially reach 100 percent of short sale transactions,” says Erik Lovell, president of Short Sale Commander. “We selected Wingspan as our partner in this solution because of their national coverage, extreme short sale and default industry knowledge, and their excellent track record in getting files closed.”

**Some Good And Bad News**

***CoreLogic, a provider of information, analytics and business services, today released its January Home Price Index (HPI) report. The report shows national home prices, including distressed sales, declined on a year-over-year basis by 3.1 percent in January 2012 and by 1.0 percent compared to December 2011, the sixth consecutive monthly decline. Nonetheless, there is some good news, too. Here’s the full story:

****Excluding distressed sales, year-over-year prices declined by 0.9 percent in January 2012 compared to January 2011, but that same metric posted a month-over-month gain, rising 0.7 percent in January. Distressed sales include short sales and real estate owned (REO) transactions.

****“Although home price declines are slowly improving and not far from the bottom, home prices are down to nearly the same levels as 10 years ago,” said Mark Fleming, chief economist for CoreLogic.

****Highlights of the Market as of January 2012 include:

****>> Including distressed sales, the five states with the highest appreciation were:  South Dakota (+5.7 percent), North Dakota (+4.0 percent), West Virginia (+4.0 percent), Montana (+3.6 percent) and Michigan (+3.0 percent).

****>> Including distressed sales, the five states with the greatest depreciation were: Illinois (-8.7 percent), Nevada (-8.0 percent), Delaware (-7.9 percent), Alabama (-7.7 percent) and Georgia (-7.5 percent).

****>> Excluding distressed sales, the five states with the highest appreciation were: South Dakota (+6.4 percent), Montana (+5.9 percent), North Dakota (+3.8 percent), Alaska (+3.7 percent) and Indiana (+2.7 percent).

****>> Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-6.7 percent), Delaware (-5.5 percent), Minnesota (-4.1 percent), New Jersey (-3.5 percent) and Georgia (-3.3 percent).

****>> Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to January 2012) was -34.0 percent.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.2 percent.

****>> The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.1 percent), Arizona (-50.8 percent), Florida (-49.0 percent), California (-43.6 percent) and Michigan (-43.2 percent). >> Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 71 are showing year-over-year declines in January, eight fewer than in December.

**By Tony Garritano**

***Everyone knows that I’m a political junkie and last night was Super Tuesday, so I can’t resist. As compared to past cycles, this Super Tuesday had far fewer contests and proportional delegate allotment, which made it hard for any one candidate to score a slam dunk. At this point, based on the delegate count, Romney seems to be a lock. If it stays a four-person race that helps Romney because the conservative vote is split. In a four-person race the other guys can’t get the delegates needed to win, but they can stop Romney from getting to the delegates he needs to win. So do they stay in and possibly act as spoilers or graciously bow out? These are politicians we’re talking about, you bet they’re going to stay in. So, the contest goes on and we’ll be treated with more negative campaigning and stupid gaffes that the media overblows because they want something to cover. As we go through this long process I’m longing for something new and different. I don’t think I’ll find that new and different thing that I’m searching for in politics, but there is something new and different that caught my eye this morning when it comes to the world of mortgage automation. Here’s what I mean:

****Bradford Technologies,a provider of valuation tools and solutions for residential appraisers and parent of the AppraisalWorld online community for appraisers, has announced the redesign of CompCruncher, its valuation technology used by appraisers to prepare statistically supported valuation reports. One of the major changes is that the system now provides regression-based analysis for GSE-approved appraisals. CompCruncher 2.0 is unique because it enables regression analysis for the most commonly used residential appraisal forms.

****The original CompCruncher produced only Collateral Valuation Reports (CVRs), a highly accurate alternative valuation report. CompCruncher 2.0, however, can be used to create Collateral Valuation Reports as well as traditional residential appraisals on GSE-approved appraisal forms. The process of using CompCruncher will remain largely the same. But once an appraiser uses CompCruncher 2.0 to develop a value, he or she will then be offered the option of choosing the type of report to produce: a CVR, the GSE-approved appraisal form 2055, and soon the appraisal form 1004.

****CompCruncher 2.0 is currently in beta testing with several lenders and appraisal management companies. Only certified and trained appraisers can use CompCruncher or CompCruncher 2.0 to create statistically supported valuations of any kind.

****“Our lender partners have told us repeatedly that they want to bring the level of reliability they get with the CVR into traditional appraisals—that’s why we created CompCruncher 2.0,” said Jeff Bradford, CEO of Bradford Technologies. “Now every appraisal can benefit from the higher accuracy that results from scientific analysis. Values can be determined based on analysis of literally hundreds of properties, rather than a handful of properties—for 100 percent of the appraisals used in the market.”

****More than 2,000 appraisers have been trained to use CompCrucher to prepare Collateral Valuation Reports. Bradford will be offering no-cost training on CompCruncher 2.0 to current CompCruncher users. The company anticipates that in 2012, it will train 5,000 more appraisers to prepare not only Collateral Valuation Reports, but also statistically supported traditional appraisals. The Collateral Valuation Report is being used by several Top 20 banks.

****“Values for an entire multi-trillion dollar industry are being supported by 25-year old valuation methods for an appraisal product that today is quickly becoming a commodity. It’s time for our industry to make some serious changes in the way we value properties,” said Mark Linne, the company’s chief strategic and valuation officer. “We need to move away from the art of appraising and start incorporating science. Most appraisal technologies tout efficiency and speed, but accuracy is where we need to focus—and CompCruncher 2.0 has the ability to bring that accuracy into virtually every residential appraisal in our industry.”

**Fixing The Transparency Issue**

***PROGRESS in Lending has learned that Mortech, Inc., a mortgage technology software company specializing in solutions for mortgage bankers and secondary market teams, has released a new technology allowing loan officers the ability to exchange real-time mortgage application data directly with their borrowers. The secure consumer-facing portal, called Connect, is available completely free to users of Mortech’s MarksmanLMPplatform. The tool increases overall transparency. Here’s how:

****“Transparency and open communication are the keys to rebuilding trust with today’s homebuyer. And that’s exactly what the new Connect technology provides,” said Don Kracl, president of Mortech. “At the same time, originators are under pressure to expend fewer resources on every loan they close. The Connect platform makes that easy by opening up a communication line directly with the borrower and allowing them to provide more of the required information on their own.”

****Connect offers the following benefits in one tool without requiring originators to buy a new technology platform:

****>> Enhanced communication between consumers and lenders. Lender personally invites consumer to the Connect platform

****>> Eases the burdens for lenders associated with collecting 1003 loan application data from borrowers.

****>> Accelerates the application process for borrowers – full application inside Connect comes pre-populated with data already collected from any previous online short form applications.

****>> Allows lenders to access and exchange consumer data bi-directionally in LOS platform and other technologies (all data from 1003 app is stored inside MarksmanLMP).

****>> Provides borrowers with the ability to check mortgage rates for their specific lender.

****>> Gives consumers access to rate calculators: “How Much Can I Afford? Should I Refinance?” etc.

****>> Provides helpful information to consumers about the mortgage process.

****>> Creates new communication channels between lenders and Realtors for status updates.

****Connect is powered by TheMorty.com, also owned by Mortech and is seamlessly integrated into Mortech’s MarksmanLMP platform. Each originator portal is automatically branded for individual companies.