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Parkside Lending Expands Jumbo Loan Program

Parkside Lending, LLC, a national wholesale and correspondent lender, announces it has expanded its Jumbo loan program and is now offering Jumbo mortgages (fixed rates or ARM options) with LTVs as high as 95 percent with or without mortgage insurance.

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Unlike other Jumbo programs that feature high LTV with mortgage insurance (MI), Parkside Lending’s new Jumbo III offers both lender-paid and borrower-paid MI options. Borrower-paid MI allows the borrower to take advantage of less expensive mortgage insurance and does not stay on for the full life of the loan.

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Parkside Lending provides four Jumbo products (Jumbo I, Jumbo III, Expanded Jumbo and Premier Jumbo), with robust guidelines and aggressive pricing.

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“As a wholesale lender that doesn’t have a retail channel, our number one goal is to provide mortgage professionals with a suite of products for their borrowers’ varying circumstances. There are creditworthy borrowers that are underserved in the Jumbo market; therefore, we continue to enhance our Jumbo offering to meet the range of needs in the marketplace,” said Clint Rosenthal, Executive Vice President of Sales, Parkside Lending.

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The Future of Funding

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Alan-HarrisIn the last few years, changes in the real estate finance industry have been fast and furious. Since the Great Recession or meltdown as the period has been affectionately named, guidance from government agencies mandated a ‘New Mortgage Order’. Many of these changes are needed, some are viewed as overkill. While we debate the impact, severity and complexity, at the end of the day, these changes are adding more rigor around our workflow streams and have an adverse impact on loan costs. The Mortgage Bankers Association Quarterly Mortgage Bankers Performance Report, reflected cost on each loan originated was $897 in the fourth quarter of 2014, up from $744 per loan in the third quarter of 2014.

Opportunity knocks. Companies that embrace, innovate and adapt to the New Mortgage Order, will develop new work flows, leverage automation, best practices and stronger operational efficiencies. Likely becoming more successful with both process, people, (be it associates or customers), and management.

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These changes, have positive impacts, the most significant is the wider adoption of ‘e’. ‘e’ has been sitting on the bench for years, carrying the water since 2000, ‘e’ is now on the field and ready to go fourth and long.

We know what benefits ‘e’ brings, they are numerous, verifiable, sustainable, and will redefine the process of mortgage loan origination, from point of sale to securitization. ‘e’ will call into review all the traditional processes and channels currently subscribed to in the industry.

We are already witnessing that impact today with the introduction of ‘e’ closing process. No longer will a lender offering ‘e’ disclosures, be considered innovative or leaders, that all goes away with the implementation of the TILA-RESPA Integrated Disclosure, (TRID) requirements.

What is clear today is that innovators are now looking to the full ‘e’ process and are thinking how can I leverage the necessary process changes to my company’s competitive advantage. The New Mortgage Order is going to require retooling technologies, supply chain vendors and delivery systems to gain higher efficiencies to reduce cost in order to capture the most savings possible. Now the lender can remain profitable, even with spikes in rates, and volumes, given the cost associated with innovation and raising the compliance bar.

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Astute lenders and providers are well on the way of recognizing and deploying solutions to meet the challenge. Leveraging technology to mitigate the cost of compliance and reporting.

This is a good time to revisit funding methodology, specifically Correspondent and Warehouse lending models.

Practices of warehouse and correspondent lending were developed in the eighties and fundamentally have not changed, albeit with the exception of improvements rendered through technology, in 30 years. Simply put:

>> Correspondent lenders have an array of products from different sponsors, and act as an extension for those larger lenders. The correspondent charges a ‘fee’ in terms of basis points on loan amount and will generally receive some amount from the investor for the value of the servicing.

>> Warehouse lenders provide a line of credit to smaller lenders who rely on that credit line to finance their operations.  They pay back the lines when loans are sold, and give a cut to the warehouse lender for each sold loan, based on volume or outstanding balances.

Think about the work stream. The lender originates the loan, runs it through the myriad of fraud, underwriting and compliance engines supplied by the Loan Origination System (LOS) or affiliated providers. Once that is complete, everything is then revalidated by the document providers and then sent to the correspondent. The correspondent then runs the loan through their regime of validation products, (many are the same as the originating lender) ultimately delivering the loan to the investor, In many cases the investor is using the same tools to evaluate risk, fraud and price as a correspondent or warehouse lender. The process exudes redundancy, inefficiency and unnecessary costs. Checking the checker never is a good way to keep cost lower, especially if they all are using the same systems to do the checking. If there is a fundamental flaw in one they are not going to catch it.

In both cases the originating lender incurs cost to deliver the loan to the investor who will service and package the loan for the secondary market. In today’s environment this process is not sustainable. If a lender could deliver loans directly to the end investor how much would cost to originate improve?

What would happen in the New Mortgage Order if the lender was able to send the package directly to investor and eliminate the additional steps, delays and cost associated with the current model? Investor Direct Funding.

When the loan is purchased by the investor on the day of closing, depending on the time of closing the loan; a lender can receive the funds that day. Lenders save money through this direct placement by not having to incur fees or charges put in place by the correspondent or warehouse lender and additional funding delays

How would an ‘Investor Direct’, funding model work?

First the loan has to be ‘e’ from soup to nuts. A full ‘e’ process from origination to funding. The reasons are obvious, delivery will be faster, the documents follow the data, all changes to data is archived for audit purposes and would have considerable less errors or omissions..

Second the data needs to be managed in a standard nonproprietary format. The newest version of MISMO, (v3.3) will map to the Uniform Closing Dataset (UCD), which is required for loan deliveries second quarter 2017. This further integrates the various processes involved with originating a loan.

Third, the model would require a data file from the lender. This data could come from the LOS or the document provider. These files need to be aggregated in order to provide a reliable and efficient delivery process to the investor. The provider of this service would be able to parse out the specific data elements required by the investor for pricing. The delivery could be single loan or bulk transactions. Additionally any required data elements for passing the servicing component on to the investor or servicer would be completed at this point.

A fee would be charged in the aggregation and delivery of these data sets, the model supports a fee based on number of transactions and not loan amount. This allows the lender to manage cost more effectively on a fixed basis as opposed to the variability of basis points.

Last the document and data set needs to be delivered to a secure eVault where all parties involved in the transaction can be authenticated for access. Simultaneously once the loan file is delivered to the eVault the data file would be pushed to the respective investor. The eVault can be ‘owned’ by the lender, the document provider or the investor. Provide the consumer login credentials and the process is complete.

Certainly there will be fallout, this occurs in the existing model, however these loans will be more fully vetted so the repurchase risk is mitigated or possibly eliminated. Further reducing the cost to the lender.

The New Mortgage Order will require obsoleting processes and practices currently based on paper processes and evolving existing work streams to distill out best practices. Embrace and understand the benefits of the ‘Order’, there are efficiencies and cost savings to be reconciled. A full ’e’ process has been recognized by the industry for years and has just sat on the bench. It is time to assess each challenge and opportunity it provides.

About The Author

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Alan Harris is the founder of IRIS Corporation and is a designated Certified Mortgage Banker, (CMB), with 25+ years’ experience in the real estate finance industry. He started in loan origination, servicing operations and system administration. Subsequently moving to Change Management, Process Re-engineering, System Integration and ‘e’ Implementation. Alan has ‘backend’ and/or User Interface ‘hands-on’ experience with the many Loan Origination and leading Servicing systems, managing integration or implementation of those platforms.
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Innovation Can Reinvent Correspondent Lending

Blue Sage Solutions has released the latest version of its Next Generation Digital Correspondent Lending Platform. The solution is designed specifically as an integrated Single Stack solution for seamless processing and communication between Correspondent Investors and their Originator network. The solution includes a robust Portal and LOS delivering the digital functionality Originators want and the intelligent loan processing functions Investors need.

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“Our team spent significant time working with clients to understand the broad set of business requirements. I think we hit the mark with the solution’s design and out of the box functionality” says President of Blue Sage Carmine Cacciavillani. He continues “using the latest technology stacks and the Cloud, allows us to deliver the intelligent automated solution the industry needs and deserves.”

The integrated Portal-LOS platform delivers the end-to-end functionality needed for originators to quickly submit loan files, as well as automated workflow for correspondent lenders to seamlessly process, decision and purchase compliant loan packages. The system supports delegated and non-delegated lending with configurability for real time two-way collaboration to drive process efficiency and transaction transparency.

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“Our clients like how rules based automation drives the process, eliminating manual tasks, increasing data accuracy and overall speed to close” says SVP Rob Strickland. ”Likewise correspondents want to work with lenders who provide automated platforms allowing them to quickly get their loans approved and purchased.”

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Correspondent Lending Made Easier

As more lenders look to increase their correspondent lending channel, the smart ones are turning to technology to boost this emerging line of business. For example, Data-Vision Inc., a provider of Internet lending technologies that enables mortgage lenders to quickly and affordably implement Web portal and e-lending capabilities, and Associated Software Consultants, Inc. (ASC), developer of the PowerLender Loan Origination System, today announced that Farmington Bank has successfully launched its new Correspondent Lending Portal (CLP). Here’s how it all came together:

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“Being able to provide an electronic lending portal to our correspondents is imperative in today’s banking market,” stated Jim Wilson, senior vice president and director of residential and consumer lending at Farmington Bank. “The CLP solution allows us to streamline processes and significantly increase production while driving cost efficiencies.”

Data-Vision’s Correspondent Lending Portal (CLP) offers a real-time cloud-based link between Farmington Bank and its correspondent lenders. Deeply integrated with PowerLender by Associated Software Consultants (ASC), Data-Vision’s CLP provides a robust solution for pricing, registration, and ongoing communications for correspondent lending. By working directly with ASC and Farmington Bank, a joint client, Data-Vision was able to offer a system that benefits both Farmington Bank and their correspondents.

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Data-Vision President, Randy Schmidt, stated, “The collaboration with ASC was exceptional, which allowed us to deliver this powerful solution to Farmington Bank. The CLP solution delivers real-time pricing, immediate registrations, pipeline management, secure messaging and document exchange. This allows for faster and more complete data transfer with less overall maintenance and better communication between all parties.”

About The Author

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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.
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Chase Moves To Automate QM Compliance

Good automation is improving the mortgage process each and every day. For example, Chase just recently announced that it will accept the LoanScoreCard Abridged Funding Request Form starting April 1, 2014, as indicated in the Chase Correspondent Bulletin issued today. Based on feedback from their correspondents, Chase will accept this in lieu of the longer traditional Chase Funding Request Form for users of the LoanScoreCard QM engine. Here’s why:

Correspondents can complete the much shorter Abridged Funding Request Form and include it along with the LoanScoreCard QM Findings Report in the closed loan package delivered to Chase — saving significant time for the originating correspondent. This advantage is unique to users of LoanScoreCard.

“We’re excited to work with Chase, one of the top correspondent investors in the U.S. And we’re thrilled to have them in our growing network of institutions that accept LoanScoreCard QM Findings,” Allen Meigide, director of operations at LoanScoreCard, said.

Running LoanScoreCard up front eliminates the need to spend valuable time and resources on non-qualified loans while assuring the originator their loans meet QM guidelines.

LoanScoreCard’s QM solution offers quantified Findings Reports that demonstrate whether a file is considered a Qualified Mortgage, with a secondary determination for either Safe Harbor or Rebuttable Presumption for that QM type in a potential Ability-to-Repay violation claim.

Thousands of institutions rely on LoanScoreCard for their QM assessment. With roughly 8,000 QM Findings rendered a day, users are able to retain their QM Findings with their loan files to evidence QM compliance.

About The Author

[author_bio]

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.
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Market Analysis: It’s All About Quality

*It’s All About Quality*
**By Tony Garritano**

***Buying a quality product is better in the long run as compared to buying something subpar that’s not going to last. It’s the same when you’re talking about the loan process, you want to do what you can to ensure quality. To this end, ISGN has launched a new Quality Control Service for Correspondents, a program for correspondent lenders with warehouse lines of credit that evaluates all quality control points in the origination of mortgage loans, from the submission of a loan application to post-closing. ISGN’s quality control expertise ensures that mortgage loans are ready for delivery into the secondary market, reducing repurchase risk.

****The top five banks are facing unprecedented loan repurchase requests, reaching a record high of nearly $25 billion in the first quarter. One of the nation’s top banks recently agreed to buy back $330 million of mortgages from Freddie Mac. Many correspondent lenders are facing higher operational and warehouse line costs associated with home loans that have been refused by investors due to loan quality issues and the difficulty in selling the loans.

****ISGN’s quality control program provides correspondent lenders with a one-stop shop for evaluating origination quality. It ensures that loan submission and underwriting standards are met, while providing essential post-closing and pre-funding quality control. ISGN’s workflow –based approach to meeting secondary market investor guidelines saves correspondents the expense of loan repurchase requests and it gets loans moving again in warehouse lines. ISGN offers lenders further quality control savings with its highly skilled global facilities, providing around-the-clock services that can highlight quality control results before the next business day.

****ISGN currently is assisting one of the nation’s top lenders with 100-percent pre-funding loan review, which has reduced the lender’s loan errors by 90 percent. It is targeting the lender’s high-risk areas in post-closing, such as incomplete documentation and income calculation errors. ISGN’s quality control process is dynamic and can be re-targeted to cover any new risk elements that emerge.

****“Investing in quality control at strategic points in the origination process can reduce the time a mortgage sits on a warehouse line of credit, freeing the line to originate more loans,” said Anne Politis, president of origination strategy at ISGN. “Our quality control services can be quickly and seamlessly integrated into the correspondent lender’s processes.”

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.
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Market Analysis: An Interesting Trend

*An Interesting Trend*
**By Tony Garritano**

***People tell me a lot of things. I have a lot of close friends in this industry. And when I can I try to share it with you. Today I heard that Mortech, a mortgage technology software company specializing in solutions for mortgage bankers and secondary market teams, have identified a trend involving more mid-tier lending institutions moving into the correspondent lending channel and seeking out suitable automation to make their new divisions profitable from day one. Here’s what they are seeing:

****“With some of the nation’s largest banks exiting the correspondent lending business, there is more opportunity for lenders of all sizes, but many don’t have the technology,” said Don Kracl, president of Mortech. “Those firms that can come up to speed quickly and have an opportunity to gain significant market share in the first quarter of 2012, but they have to take action before others move in to fill the gap.”

****Mortech executives became aware of the trend when inquiries for the firm’s MarksmanLMP ticked up in the wake of Bank of America’s announcement to discontinue its correspondent channel. MarksmanLMP offers a Channel Manager product for mortgage bankers with third party origination businesses. Mortgage professionals can use the Channel Manager service to distribute correspondent pricing to their clients, deliver fully-adjusted rates, use as a locking platform and several other features. Numerous correspondent lenders already count on Mortech software for lending automation.

****“Our most recent build added new features designed for ease-of-use and seamless interactions between lenders and their correspondents,” said Kracl. “We are excited for our clients and are standing by with the technology they need to capitalize on these new opportunities.”

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.