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Compliance Expertise Is In High Demand

Compliance experts are being sought out. For example, for over 35 years, Dallas-based MRG, a mortgage banking compliance organization, has provided to the mortgage industry at large a blend of compliance, document preparation and technology, products and services. To this end, MRG compliance expert Marsha Williams has been asked to share her extensive compliance expertise at the following upcoming industry events:

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Texas Association of Bank Counsel Convention – Bastrop, TX – September 20 – 22

“What’s Happening in Residential Mortgage Lending?”

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MBA Risk Management, QA & Fraud Prevention Forum – Miami, FL – September 24 – 26

“Construction Lending”:  Compliance and Risk Management”

In today’s constantly changing regulatory environment, MRG’s compliance expertise is in high demand. MRG’s team of compliance experts recognizes the business imperative of proactively monitoring and continuously analyzing regulatory changes, trends, and impending regulations that impact your business. MRG’s team of professionals is constantly on alert for changes from all federal, state, local and investor requirements to provide lenders with up-to-date compliance insights.

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As a lender, you should be focused on generating and maintaining a profitable business in this volatile market, rather than constantly worrying about the enormous and ever-changing regulatory landscape. Your burden is too great, and the risk is too high to rely solely on your internal staff to provide legally defensible compliance.

As a result lenders should turn to the experts that other leading providers and industry sources trust like MRG and others.

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Progress In Lending
The Place For Thought Leaders And Visionaries

Finally Getting It Right

The CFPB’s announcement that it had finalized the long-awaited amendments to TRID, initially proposed in July 2016 and commonly referred to as “TRID 2.0,” was a welcome surprise. The industry had been calling for updates, both in the way of substantive changes as well as clarifications of numerous ambiguities in the rule, since TRID’s inception. With the finalization of TRID 2.0, the CFPB has at last answered those calls.

“While the yearlong delay since its initial proposal has been frustrating to many in the industry, I think it’s clear from reading through the final rule that the changes ultimately adopted, and the Bureau’s accompanying commentary, reflect a thorough and thoughtful consideration of all feedback received from consumers and industry in response to the updates initially proposed. The Bureau clearly took their time to try to “get it right,” and I think they should be commended for that,” said Michael Cremata, Senior Counsel and Director of Compliance, ClosingCorp.

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Headquartered in San Diego, Calif., ClosingCorp owns and operates the premier source of intelligence for closing costs and service providers in the U.S. residential real estate industry. Through innovative solutions, progressive technologies and strong alliances, the company delivers timely, accurate and transparent results that help optimize closing processes and services for mortgage lenders, title and settlement companies and real estate professionals. Clients rely on ClosingCorp to help improve efficiencies and mitigate risk.

“Some of the important changes made by the rule include: introducing a tolerance for the “total of payments” disclosure; clarifying requirements around the disclosure of construction and construction-permanent loans; expanding the exemption for certain housing assistance loans; and clarifying and revising various calculations in the “Calculating Cash to Close” table. All of these changes are helpful, and should be welcomed by the industry. However, there are a few areas where I believe the Bureau missed the mark.

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“One such area is the final rule’s failure to add meaningful guidance regarding the extent to which settlement service fees may be itemized on a Loan Estimate (LE) or Written List of Providers (WLP). While the initial proposal included a helpful clarification that fees for certain “packages” of settlement services may be aggregated, the Bureau decided to drop this clarification from the final rule in favor of a comment clarifying that lenders need not include on the LE or WLP “related fees . . . not themselves required by the creditor . . . such as a notary fee, title search fee, or other ancillary and administrative services.” Whether or not these fees are disclosed on the LE or WLP, though, the rule makes clear that they still must be included in tolerance calculations at closing if they fall in the “10% bucket.” Therefore, no lender would intentionally exclude “related” fees from the LE or WLP and thus suffer a smaller “baseline” for purposes of calculating tolerances (and that’s to say nothing of the context in which the fees are held to zero tolerance, in which case there’s no clarity at all as to how they would be treated for tolerance purposes).”

However, John Levonick, Director of Regulatory Compliance at Clayton Holdings believes that as the industry digs through the new 2017 TILA-RESPA Integrated Disclosure Rule (TRID), or TRID 2.0, compliance and quality control service providers are left scratching their heads about the complexity, and possible confusion, that the rule’s open adoption period is going to create.

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“Based on our preliminary review of the 560 pages of “clarifications” that make up TRID 2.0, many if not most of the changes ease more onerous obligations from a timing, data, tolerance, content or calculation validation perspective,” said Levonick.

“The TRID 2.0 rule has an effective date that is 60 days from the date on which it is published in the Federal Register. However, compliance with the rule is optional for creditors until the mandatory compliance date of October 1, 2018. This creates an open phase-in period from the publication date through October 1, 2018, whereby creditors are permitted to choose to handle certain origination practices and disclosures either (1) in the way that was in place prior to the TRID 2.0 effective date, or (2) in the way identified as appropriate in TRID 2.0. In other words, during this phase-in period creditors can selectively comply with whichever individual requirements within the original rule and the TRID 2.0 rule that they prefer. Good news for lenders; bad news for automated rules engines and QC personnel.

“From a technology standpoint, this will cause certain external automated compliance tools to falsely identify errors that prior to TRID 2.0 were “material” and are now no longer. Providers will then need to manually “clear” these non-material errors. Most of the TRID 2.0 changes will require only minor readjustments to current loan origination system configurations (although construction loans will require more). But even minor changes take development time. And, at the moment, with many lenders focused on the coming Uniform Closing Dataset (UDC), the TRID 2.0 changes—which will not be subject to enforcement liability until the October 1, 2018 mandatory compliance date—will not go to the head of the queue.”

The bigger question is how will the Secondary Market react to TRID 2.0? Will investors be concerned about liability, and whether consumers have a private right of action for errors arising during this 2017 TRID phase-in window? “This will remain an unknown, to be addressed on a case-by-case basis as issues are identified. While the CFPB has stated that its “clarifications” are not retroactive, what will become of pre-existing TRID errors that, had they occurred after TRID 2.0’s effective date, would not be TRID errors?” answered Levonick.

“In the meantime, we all continue to work through the new rule, hopeful that, in the long run, its clarifications will reduce confusion, lead to fewer errors in origination, and increase secondary market pull through on loan acquisitions,” he added.

Cremata agrees that TRID 2.0 has some flaws. “It’s disappointing (although not surprising) that the Bureau refused to address simultaneous issue rates, additional cure mechanisms, or the so-called “black hole” (although the black hole is the subject of a new proposal, released at the same time as the final rule, on which the Bureau is currently seeking comments).

“Overall, the finalization of TRID 2.0 represents a significant positive development for the industry. Although it fails (or declines) to resolve several of what have been the industry’s biggest pain points with TRID, it nonetheless introduces a number of much-needed clarifications and amendments, and is unquestionably a step in the right direction by the Bureau,” he concluded.

About The Author

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

Paradatec Named Verified UCD Producer By Freddie Mac

Paradatec, Inc., a provider of Optical Character Recognition (OCR) solutions for mortgage file processing, announced that it is a verified technology integration vendor for Freddie Mac’s Loan Closing Advisor platform. Paradatec’s WriteUCD module was developed in accordance with Freddie Mac’s requirements for producing valid Uniform Closing Dataset (UCD) files.

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The UCD is a common collection of data that mortgage lenders will be required to deliver digitally to Freddie Mac and Fannie Mae starting on Sept. 25, 2017. This requirement is part of the Uniform Mortgage Data Program (UMDP), an industry-wide drive to build a better housing finance system in the United States.

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The WriteUCD module leverages Paradatec’s advanced OCR solution for the mortgage market to extract data from closing disclosure (CD) documents in mere seconds per page and then format that data in the required format.

According to Neil Fraser, Paradatec’s Director of US Operations, “We’re pleased to have obtained Freddie Mac validation as our clients need the assurance that they can meet the GSEs’ requirements well in advance of the September deadline. If a lender’s current loan origination system partner or document provider is struggling to produce a valid UCD file, they can sleep soundly knowing that Paradatec has them covered with our new WriteUCD module.”

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Paradatec also announces the release of their new AuditUCD module for auditing UCD file content against the closing disclosure contained in the UCD file. Fraser continues, “Since we’re building the UCD file from extracted closing disclosure data, it’s just as easy for us to unpack a UCD file’s content to compare the individual data elements against the values extracted from the submitted CD to verify the integrity of both components in the UCD file. Any elements that don’t match will be flagged in our XML output for further review and resolution. Given the volume of content that will be produced and need verification with this UCD initiative, our solution is uniquely positioned to offer a high degree of automation and operator efficiency.”

About The Author

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

LenderLive Expands Its Compliance Services

LenderLive Services LLC, a division of LenderLive Holdings, Inc. (“LenderLive”), will now provide expanded compliance services through a new line of business: LenderLive Compliance Solutions. The new entity will offer both bundled and a la carte services to banks, non-bank mortgage servicers, credit unions, and other financial institutions. Maria Moskver, general counsel and enterprise compliance officer for LenderLive, will lead LenderLive Compliance Solutions.

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Over the past two decades, LenderLive Services has developed significant in-house expertise in regulatory compliance, operational controls, systems and industry best practices. The company maintains one of the most extensive template libraries, including origination documents for all 50 states, as well as borrower communications for loss mitigation, pre-foreclosure/default and general servicing. LenderLive is trusted by eight of the top 10 mortgage and financial companies in the U.S. for compliance and outsourced critical borrower communications.

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LenderLive will continue to offer its Compliance Solutions bundled with best-in-class fulfillment and document services, to enterprise clients.

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In addition, LenderLive Compliance Solutions will now give smaller companies the option to access its compliance solutions on an a-la-carte basis. This flexible approach will allow community banks, credit unions and regional banks to supplement their internal compliance resources with LenderLive’s proven expertise. These services include:

>>Ongoing regulatory monitoring and alerts for regulatory changes at federal and state levels.

>>Access and use of LenderLive’s wide-ranging state and federal template library.

>>Ongoing template updates and review services.

>>Client-focused webinars covering key servicing, loss mitigation and default topics.

Custom research and consulting on regulatory compliance issues, including operational and best practice perspectives, to accelerate implementation times.

“Historically, financial institutions have turned to LenderLive for turnkey solutions that have reduced costs and kept them compliant,” said Rob Clements, CEO of LenderLive. “What we are doing now is leveraging the embedded expertise we’ve developed and providing financial institutions these services in two distinct ways, helping to create greater efficiencies for every specific need.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Paradatec Achieves Fannie Mae UCD Certification

Paradatec, Inc.’s new WriteUCD module was recently certified by Fannie Mae as meeting their requirements for producing valid Uniform Closing Dataset (UCD) files. This new module leverages Paradatec’s Optical Character Recognition (OCR) solution for the mortgage market to extract data from Closing Disclosure (CD) documents and then format that data in the MISMO standard required by Fannie Mae. The certification process required submitting test UCD files for multiple lending scenarios for Fannie Mae’s review, with all tests being passed successfully.

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According to Neil Fraser, Paradatec’s Director of US Operations, “Developing this new module was an easy decision for us. Many clients are already using our solution to extract data from the TRID documents to support certain internal review and audit procedures, so since we have the logic to extract this data it made sense to create a module which formats this data per the UCD specification. Now that we’ve attained certification with Fannie Mae, our clients who work with them are assured of complying with their September 2017 UCD requirement with this new WriteUCD module.”

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Paradatec also announces the release of their new AuditUCD module for auditing UCD file content against the Closing Disclosure contained in the UCD file. Fraser continues, “Again, developing this module was a logical extension to our mortgage solution. Since we’re able to build the UCD file from extracted Closing Disclosure data, it’s just as easy for us to unpack a UCD file’s content to compare the individual data elements against the values extracted from the submitted CD to verify the integrity of both components in the UCD file. Any elements that don’t match will be flagged in our XML output for further review and resolution. Given the volume of content that will be produced and need verification with this UCD initiative, our solution is uniquely positioned to offer a high degree of automation and operator efficiency.”

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Paradatec’s OCR solutions offer significant efficiencies for classifying large quantities of differing document types and extracting key data elements from those documents.  In the mortgage market, these capabilities allow for quick and accurate identification of over 500 unique documents in the typical mortgage file, along with the ability to capture nearly any data element from those documents that an organization requires.

Progress In Lending
The Place For Thought Leaders And Visionaries

QC Player Is Ready For Day 1 Certainty

ACES Risk Management (ARMCO), a provider of financial quality control and compliance software, has updated its flagship ACES Audit Technology with new functionality that aligns with Fannie Mae’s Day 1 Certainty (D1C) initiative. With this update, ACES now includes additional fields for assessing asset, income, employment and collateral data according to Fannie Mae’s D1C initiative. The company also updated its rule-based technology to assist auditing these loans according to the D1C initiative.

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ACES users continue to use ACES Intelligent Questionnaire technology to customize questions and scripts according to their own unique needs and objectives. ACES’ direct import of D1C data enables users to preserve the integrity of their QC processes, while also aligning with D1C parameters.

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“Lenders can gain added protection under Fannie Mae’s Day 1 Certainty initiative, but they have to follow certain protocols,” says Phil McCall, COO of ARMCO. “We updated ACES so our clients can automate their auditing process to account for the different checkpoints associated with D1C. Our clients know that ARMCO’s mission is protecting their businesses. They know they can rely on us to stay on top of all guidelines, initiatives, regulations and trends, and they know we will continue providing the tools that help them grow and protect their businesses, not just for now, but also for the long haul.”

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The recent ACES software enhancement went into effect for all clients June 12, 2017.  Clients and interested parties can get further information on this update via the proprietary ACES Knowledge Center, or by visiting the ARMCO website (www.armco.us) for a demonstration of the latest software.

Progress In Lending
The Place For Thought Leaders And Visionaries

Ensuring Total UCD Compliance

DocMagic, Inc. has announced that its technologies are now capable of supporting both phases of the upcoming UCD (Uniform Closing Dataset) requirement. The company’s technology solutions, which have been certified by Fannie Mae and Freddie Mac for both phases of the UCD file delivery mandate, enable lenders to start immediate testing of full UCD delivery—well in advance of the phase one 2017 deadline and the phase two 2018 deadline—as has been recommended by both GSEs.

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The Uniform Closing Dataset (UCD) is a common industry dataset that allows information on the Consumer Financial Protection Bureau’s (CFPB’s) Closing Disclosure to be communicated electronically.

On September 25, 2017, the GSEs will require lenders to deliver borrower data and the Closing Disclosure in the UCD file. Later, in 2018, the second phase of the mandate will require seller data to be included as well. However, according to a joint statement issued by the GSEs, both Fannie Mae and Freddie Mac are recommending that lenders start to “submit files with both Borrower and Seller data, if available, in order to test their processes and become familiar with the messaging from each GSE’s collection system.”

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DocMagic’s technology solutions allow lenders to fulfill the GSEs’ recommendation by generating and compliantly delivering UCD files that include both borrower and seller data to the GSEs. DocMagic can also accept UCD XML data from third parties and deliver it to the GSEs. In addition, the company offers an API for direct, seamless connection to the GSEs’ technologies.

“At DocMagic we went above and beyond attaining the initial GSE UCD certification because we want our customers to have the option to implement the GSE-recommended testing, which allows them to implement phase two requirements now,”  says Tim Anderson, director of eServices at DocMagic.  “Phase one addresses the XML file for the borrower CD and associated data, but the GSEs have definitively recommended that lenders complete everything before the phase one September 25, 2017 deadline. We find that lenders that are serious about sustained profitability and growth tend to follow GSE recommendations and take action ahead of time. Now with DocMagic, all of our lender clients have that option.”

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To assist lender clients in preparing to meet the entire UCD mandate, DocMagic recently launched its ‘UCD Control Center,’ a one-stop, go-to resource for everything lenders need to know about the UCD requirement.  It offers tools, documentation, interactive communication for Q&A, webinars, updates, and most importantly the ability for lenders to test for the entire UCD mandate ahead of the complete 2018 deadline.

The company says its goal is to have the bulk of its clients fully prepared to meet the requirements for both phases this year.

“Our customers and partners rely on us to do everything we can to assure they transact the safest, most compliant loans—and helping them prepare for a major new mandate like the UCD requirement is no different,” said Dominic Iannitti, CEO of DocMagic. “Lenders, settlement providers and other organizations must prepare now or run the precarious risk of being unable to sell their loans.”

About The Author

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

QuestSoft And OpenClose To Hold Webinar On The New CFPB HMDA Rules

OpenClose, a multi-channel loan origination system (LOS) provider, and QuestSoft, a provider of automated mortgage compliance software, announced that they will host a joint webinar covering the new CFPB HMDA regulations, how they will impact organizations, and outline specific plans to make compliance with the new HMDA rules the most efficient and time-saving process in the mortgage industry. The webinar will be held on June 21, 2017 from 1:00 p.m. – 2:15 p.m. EDT.

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Entitled “The New CFPB HMDA Rules, What You Need to Know,” this webinar will provide insight on not just what the new rules are, but what organizations will need to prepare for well in advance of the January 2018 implementation deadline. The companies say that while the deadline may seem a long way off, there are business-critical functions that should considered now or run the risk of being caught off-guard.

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Key topics that will be covered in the webinar: 

  • The inside day to day nuances behind the new regulations.
  • Above and beyond: practical, actionable information will be provided to attendees, not a legal review as is typical with most HMDA webinars.
  • New loan types required with HMDA and how OpenClose and QuestSoft are answering the call.
  • Recommendations for improving data integrity across the enterprise.
  • A timeline of the changes and companies need to prepare for in advance.
  • The new public face of HMDA: implications for Fair Lending and the future of mortgage lending.

OpenClose and QuestSoft will also touch on key updates being made their specific products that will help companies effectively test, train and prepare for, including release dates and 2018 CFPB HMDA data that can already be tested now.

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Speakers:

Kathy Olsen, director of LOS support services at OpenClose

Kathy leads customer support and training at OpenClose for its multi-channel LOS, LenderAssist, as well as its integrated products. She joined OpenClose in 2010 and has over thirty years of experience in the mortgage banking and technology fields.

Leonard Ryan, president of QuestSoft Corporation

Leonard has been associated with the mortgage industry for over 30 years, and is the founder of QuestSoft. He is a member of both MBA HMDA and NMLS Mortgage Call Report working groups, and is nationally recognized as a HMDA expert.

Downloadable materials that will be made available after the webinar: 

  • Presentation Slides [PDF] — available on the day of the webinar
  • Webinar Recording [streaming] — available 2-3 days after the webinar
  • Q&A [PDF] — available on the day of the webinar

The webinar is offered as complimentary to the mortgage industry but availability is limited. To sign up for the webinar, go to https://goo.gl/E8cTzP.

About The Author

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

QuestSoft Urges CFPB To Delay Implementation Of HMDA Specific Data Points

In a letter written to the Consumer Financial Protection Bureau (CFPB) addressing proposed changes by the CFPB to its HMDA regulations, QuestSoft president Leonard Ryan urged the Bureau to delay its changes to geocoding and remove additional demographic data.

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The eight page letter focused on five key areas of the new regulation:

  1. Bona Fide Errors and Proposed Geocoding Safe Harbor
  2. Demographic Data Collection – Specifically as it related to Ethnicity and Race Subcategories
  3. Reporting Threshold Adjustments
  4. NMLSR ID Reporting
  5. Industry Readiness

Ryan expressed concern for the future of LMI lending as a result of the CFPB plans to introduce a less accurate geocoding system but bolster it with a safe harbor. The new geocoder is expected to be 30% less accurate on results close to census tract boundaries and not be able to accommodate new addresses as quickly as products used in the industry today (including the FFIEC geocoder).

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Ryan also expressed concern that a guarantee on the geocoder will eliminate the higher quality products from the market and cause accuracy concerns for the Community Reinvestment Act and the trading of Low Moderate income loans in the open market.

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In the letter, Ryan continued with a detailed analysis of problems facing the industry over the new Ethnicity and Race Subcategories, urging the Bureau to provide at least one extra year due to implementation delays of both the CFPB and the GSE’s in releasing the new Uniform Residential Loan Application (URLA).

“In many ways, the demographic data additions are turning out to be the biggest train wreck of the new regulation,” Ryan said. “The lack of clarity and confusion over properly classifying borrowers has the potential to be a regulatory and fair lending compliance nightmare.”

A complete version of the letter is available at https://www.questsoft.com/hmda-hq

About The Author

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