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The Impact Of Fintech

According to a recently published working paper by researchers at the Federal Reserve Bank of New York (FRBNY) and New York University, fintech lenders have quickly expanded their market share since the Financial Crisis, and in the process have developed efficiencies that give them a significant advantage over more traditional lenders. Prominent mortgage industry executives gathered in Washington, DC at the 8th Annual PROGRESS in Lending ENGAGE Event sponsored by Get Credit Healthy, QuestSoft and Optimal Blue, to really drill down on this industry trend. How has fintech impacted mortgage lending? Here’s the scoop:

“Everything has to be relevant,” says Joseph Ludlow, VP at Advantage Systems. “The proliferation of cell phones has driven technology and innovation. Everything has to be real-time, all the time.”

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“We can’t think of innovation as something that happens over night,” noted Luke Wimer, COO at Asurity Technologies. “It’s about changing what a customer usually does. No one person or vendor will bring all the innovation. We have to bring people and systems together.”

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“The average originator is 52 years old,” points out Christine Beckwith, National VP of Realtor and Sales at Annie Mac. “The customer wants to be mobile and so do the new originators, but we have to get the average originator in his or her 50s onboard. It’s a balancing act.”

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“The older originator’s adaptability is challenged,” concluded Ski Swiatkowski, Business Growth/Leadership Specialist at Silver Hill Funding. “However the new originator is a millennial and they want fintech. Rocket by Quicken was good for the industry because now everyone sees the value of using fintech to improve the mortgage process.”

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.

MAXEX Launches Private Market Exchange For Trading Mortgage Loans

MAXEX, LLC, a residential mortgage loan exchange provider, announced the public launch of its digital platform and market exchange for buying, selling and settling mortgage loans through a single counterparty. MAXEX is the only platform in the mortgage industry to offer a centralized clearinghouse that enables buyers and sellers to trade anonymously with multiple counterparties using a single standardized contract while simultaneously reducing costs and increasing the efficiency of secondary mortgage market transactions.

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The MAXEX platform features best-execution pricing and access to a wide range of qualified buyers and sellers. To date, MAXEX has facilitated more than $2.3 billion in initial trading activity and participated in 16 securitizations of more than $500 million in residential mortgages. MAXEX has been approved for trading by many of the most active secondary mortgage market buyers including major Wall Street dealers, money center banks, insurance companies and a growing pipeline of other premiere buyers. J.P. Morgan has been a strategic commercial partner in MAXEX since late 2017 and MAXEX’s recent funding round was led by Moore Asset Backed Fund, LP, an investment fund managed by Erik Siegel of Moore Capital Management, LP.

“As we’ve examined the US mortgage market, we see an opportunity for MAXEX’s exchange and infrastructure to benefit both buyers and sellers of all types and sizes,” said Siegel. “The launch of MAXEX’s digital platform and exchange will help improve the transparency, execution, efficiency, functionality and growth of the secondary mortgage and origination markets. We are excited to partner with MAXEX and look forward to being a part of their future success.”

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Not only does the MAXEX platform simplify the loan trading and settlement process, it also automates the entire workflow through its standardization of the legal contract, underwriting guidelines, seller guide, pricing, loan delivery, loan review, condition clearing, purchase advice, funding and settlement and servicing transfer.

“The aggressive move of big league investors onto the MAXEX trading platform suggests a long-awaited secondary market opening outside the government footprint,” said Jim Parrott, former senior housing policy advisor to the White House. “What makes this particularly interesting is that MAXEX is not simply opening the non-agency market up to investors, as you’d see with the revival of the private label securitization market, but also to small, community lenders that have been long dependent on the market giants Fannie and Freddie.”

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“With over $15 trillion loans outstanding and $1.7 trillion per year in new originations, the U.S. mortgage market is the second largest debt market in the world, behind only the U.S. Treasury market, and yet mortgage loans have never been successfully put on a centralized exchange,” said Tom Pearce, CEO and Chairman of MAXEX. “For decades, the secondary mortgage market has struggled under the weight of old, inefficient business practices that make trading loans complex and expensive, disadvantaging small to mid-sized lenders. MAXEX levels the playing field for all participants while reducing costs and providing broader market access.”

The MAXEX platform offers a dramatic leap forward for mortgage trading. Traditionally, buyers have dictated how every secondary market loan transaction is completed. On average, each seller is set up to transact with 11 buyers and each buyer has over 10 unique activities the seller must navigate to correctly underwrite and sell a single loan. By forcing all parties to comply with each buyer’s unique processes and operational constraints, loan trading becomes more costly and risky. It also limits the number of relationships between buyers and sellers, thereby reducing market access and opportunities for growth. The MAXEX platform simplifies all transactional complexities for both buyers and sellers and standardizes the trading and settlement by utilizing one centralized counterparty, MAXEX Clearing.

“The secondary mortgage market has been in dire need of innovation and modernization,” said Steve Abreu, founder and CEO of Newfi Lending, an active seller on the platform. “MAXEX has brought revolutionary change to the process of trading mortgages by creating a linear, systematic platform and exchange that brings transparency and efficiency and opens the market to an innovative way to buy and sell loans.”

With seller adoption accelerating (more than 80 sellers are currently approved to trade on the exchange and growing), MAXEX aims to become a market utility that offers private market solutions designed to support the non-conforming market while continuing to embrace the standards set by Fannie Mae and Freddie Mac.

MAXEX supports powerful execution strategies, so buyers can upload rate sheets and identify specific types of loans and loan pools to purchase. Sellers can quickly import loan attributes, view pricing and lock and register loans for sale all in real time. MAXEX’s proprietary rules-based audit and review engine performs granular image classification, document inclusion checks, data extraction and validation, cross-document data verification and program product eligibility tests on each loan file to facilitate cost effective and efficient loan trading and settlement.

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.

Innovating The Mortgage Process

As the story goes, when Matt Hansen developed the mobile mortgage app that would become the catalyst for SimpleNexus, he wasn’t thinking about starting a company. He was trying to help solve a problem for his brother-in-law, a mortgage loan originator, who was tired of constantly having to recalculate customer loan payments by hand.

As Matt added features, customers followed, fueled exclusively by user referrals. It soon became obvious that what he created was much more than a passion project for evenings and weekends. It was something that filled a real market void. So, in 2014, joined by a handful of colleagues in the software industry, Matt turned SimpleNexus into his full-time business—and has never looked back.

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Today, SimpleNexus is a 75-person organization, signed with 15 of the top 25 lenders, over 180 mortgage company customers, and more than 18,000 users nationwide. More importantly, it’s a company that’s making a difference. Our Editor talked with Ben Miller, President/COO at SimpleNexus, to get his take on the mortgage industry.

Q: Why has the role of the loan officer been a primary focus at SimpleNexus from the beginning?

BEN MILLER: Our CEO, Matt Hansen, built the first version of the app at the request of his brother-in-law who was a mortgage loan originator tired of constantly recalculating customer loan payments by hand. Matt developed a simple solution over the weekend for him that garnered significant interest from additional originators in the ensuing weeks. The early focus at SimpleNexus was on creating a tool for the loan originator to support the vital role they play in the loan process. We still believe in loan officer’s role today and recognize the value their human touch plays in the loan transaction. SimpleNexus enables loan officers to close loans more quickly, increase Realtor referrals, and gain a competitive advantage. The platform turns loan originators into mobile originators, allowing them to stay productive and take action on a loan anytime, anywhere. We have built our platform around enhancing, rather than replacing, the loan officer’ role and have witnessed an industry wide embrace. We have 18,000 plus loan officers and over 180 enterprise mortgage companies now using our platform!

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Q: How has listening to customers guided the evolution of your platform?

BEN MILLER: In August we were named to the Inc. 5000 list of fastest-growing private companies. We have grown 1,405% in the last three years alone. That’s an achievement that we attribute directly to our lenders’ success using our platform. We value their ongoing feedback of what they want out of our platform and have repeatedly made those requests a priority as we further develop our digital mortgage technology. Listening to our customers has made our product better and our company successful. One specific example is when one of our customers came to us regarding handling appraisals. They explained they had and AMC but their loan officers were having issue with the appraisal since the needed info was being filtered through three different people and took a week to get to them. We took that feedback and went to work developing a direct integration with the AMC. We were able to remove steps in communication process and increase efficiency of the appraisal process to enable the loan officer to take action immediately.

Q: How should lenders vet technology partners to better support their digital mortgage strategy?

BEN MILLER: We at SimpleNexus think that lenders should ask the following questions:

What LOS, applications and software can the digital mortgage platform integrate with? Look for a platform that integrates as much of your existing technology and third-party provider applications as possible. If it can’t integrate with your LOS, pricing and credit systems, and critical third-party applications, then move on.

Can the user access all of these systems with a single sign-on? The idea is to streamline access to everything your users need to do their jobs.

Is there both a web-based and mobile element to the digital mortgage platform? Mobility is critical for giving loan officers access to the information they need to quickly respond to borrower and Realtor requests from anywhere, without circling back to the office.

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Can the digital mortgage platform be used with referral partners and borrowers? Many platforms and applications are borrower-centric. Although the customer experience is paramount, the opportunity to create stickiness with Realtors, builders, and other referral partners will add to the value of the platform.

Does the digital mortgage platform give loan officers borrower insight? While it is essential to give borrowers and Realtor’s transparency into loan status, to maximize value, the platform should also provide a way for loan officers to monitor borrowers’ engagement levels.

Is it easy to use? If you add a platform or introduce an application that’s just “one more thing to learn,” you won’t get the return on your investment. Loan officer adoption is everything, which means the platform has to be intuitive and easy for your originators to use, without a lot of training.

Finally, talk to other lenders that use the product, particularly those that use the same LOS and third-party providers. Ask about their experience with the implementation, their loan officers’ reaction and their return on investment, as well as the level of service they’ve received post-sale. Most importantly, don’t stop with one phone call. Speak to as many different companies as possible to get the user perspective of the platform.

Q: How is your approach to integrations unique and what kind of value does it deliver to your users?

BEN MILLER: Our goal in each integration we develop is how we can provide more value to our customers. We look for partners who share the desire to co-develop technologies that create value for the end user. It’s typical in the industry to adopt a revenue-sharing model to cover the costs of building the integration. The issue with this model is it actually increases the cost to originate. At SimpleNexus we choose to take a different approach to integration partnerships. We want to create value for our customers by creating integrations that reduce costs to lenders and in turn borrowers. The partners we choose to work with on integrations have the same desire of creating this type of value.

Q: Your platform also touts the deep connection it makes between loan officer, Realtors and borrowers. Can you explain why this is an important differentiator?

BEN MILLER: It’s common for new technology within the mortgage industry to focus solely on the customer. The borrower experience is vital but a true digital mortgage strategy also needs the technology to address the loan officer experience in addition to bringing the Realtor into the platform for maximum efficiency and ROI. SimpleNexus unites all three parties into a single platform so they stay connected as they exchange data, documents, and communicate throughout the loan lifecycle. Our lenders are reporting faster closing times, more online loan application submissions, increased referral business, and world-class NPS and customer satisfaction.

Q: Can you explain how connecting loan officers, Realtors and borrowers improves communication?

BEN MILLER: The SimpleNexus platform gives unprecedented visibility to the loan officer, Realtor and borrower during the entire loan process. Delivering transparency and data when and at the time the desired party needs the information. This solves the pain point that each party feels when they are uncertain about loan status and have to email or call to find out.  This saves everyone time while delivering a dynamic customer experience.

SimpleNexus’ enhanced communication features work together to improve the borrower experience, which means better reviews and more referrals for loan officers and their Realtor partners.

Q: Why does SimpleNexus emphasize bringing Realtors into a lender’s digital mortgage strategy?

BEN MILLER: Realtors have a more extensive network of valuable connections needing loan services and it’s no secret that a borrowers first point of contact for purchasing a home often starts with a real estate agent. Our digital mortgage platform includes the Realtor component for several reasons. First, real estate partners are the most productive source of referrals for a loan officer. By giving Realtor partners an easy-to-use app they can share with their borrowers, you increase your referral opportunities significantly. Second, our platform is whitelabled and can easily be co-branded for each individual Realtor partner. They can add their own custom links such as customer reviews and a home search and becomes a value add to the partnership. Finally, the app provides a smooth borrower experience, which the Realtor will appreciate. Borrowers can easily upload documents, use the convenient communication features and know next steps – all while the Realtor stays informed with transparent loan status updates of where their borrowers are in the process.

Q: How does a platform like SimpleNexus help as a recruiting tool for lenders when looking to attract top loan officers?

BEN MILLER: It is important to find a technology solution that empowers your loan officers. The tool should help originators close loans faster, so they can sell more and make more money, without putting in additional hours of work.

After finding the right solution lenders need to demo the tools for their prospective employees (i.e. loan officers), show them how it will make their lives easier. SimpleNexus clients have found success in recruiting meetings by showing their prospective employees how the platform works, how the app can be custom branded to each individual LO and co-branded for Realtor partners.

Technology demos during recruitment can go a long way in showing how the company is invested in helping loan originators work more efficiently, earn more, and have a better quality of life. With SimpleNexus, LOs don’t need to spend their nights and weekends catching up at the office; they can close more and spend their off time with family and friends.

Top producing loan officers are in high demand, so providing them with tools to make their job easier and more productive is critical to attracting and retaining them. The ability to use the SimpleNexus platform on mobile devices gives loan officers the freedom to work with borrowers from anywhere with a few keystrokes. The platform sends a file back to the LOS automatically, so compliance is also assured. Being able to take quick action keeps borrowers satisfied, which builds trust with referring partners.

Q: How does SimpleNexus increase efficiency for the borrower?

BEN MILLER: One of the most frustrating aspects of applying for a mortgage is the collecting of documents by the borrower, trying to email or mail the documents to the lender and keeping track of all of the documents that were provided. The SimpleNexus platform lets borrowers use their mobile device to upload documents or photos of documents in a one-step process that ends the paper chase. This significantly improves the borrower experience while reducing friction points in the application process.

Q: You have mentioned a single branded platform numerous times.  Why is that so important for lenders?

BEN MILLER: Traditionally, processing a mortgage loan isn’t a one-system, one-click sort of job. It’s a complicated process, requiring access to your LOS, to your CRM, and also to credit bureaus, pricing engines, and other third-party providers to make things happen.

Wouldn’t it be great if you had a mobile app that brought all of these resources together in one, convenient hub—along with fast access to your Realtors and borrowers?

SimpleNexus makes this vision a reality.

Our easy-to-use mobile app connects lenders with everything and everyone that is needed during the mortgage process, right from the loan officer’s mobile device.  That means loan officers work more efficiently, spend less time in transit, and more time actually getting things done.

Keeping the lender and their loan officers name front and center is easy with SimpleNexus. The app is white labeled, so instead of promoting our company, it promotes yours. You can brand the app with your information and offer your Realtors their own co-branded versions, for that one-two marketing punch. Every interaction keeps your name at the forefront, building your brand as you build your client base.

No matter the device you use, a seamless, omni-channel experience awaits.  Providing a great borrower experience means making that experience consistent, across all channels, and points of contact. With SimpleNexus, information flows seamlessly between web, phone, and tablet. So, if your borrower starts a mortgage application on the website, they can pick up where they left off on any mobile device. The origination process is identical across all channels, and only requires a single user login and password.

If your prospects or Realtors are in a rush, they don’t have to waste valuable time searching the app store to download SimpleNexus. Instead, you can text the app to them—either from your phone or originator dashboard. And, if you want to scan documents with the app, but not assign these to a specific borrower file, no problem. When you’re ready, the documents will be waiting on your originator dashboard.

INDUSTRY PREDICTIONS

Ben Miller Thinks:

1.) Personal touch and experiences for borrowers will continue to set companies apart from their competition.

2.) Companies with better technology supporting their loan officers will recruit and retain the best talent.

3.) The industry will continue turning to technology to drive backend process efficiency for managing cost in a raising rate environment.

INSIDER PROFILE

Ben Miller is President/COO at SimpleNexus. Ben joined SimpleNexus in 2014 as one of its original employees. Today, as COO, Ben runs the operations side of the house, which ranges from setting up strategic partnerships to managing implementations, to developing employee benefits programs. His mission is keeping the company efficient as it scales, expanding partnerships and bringing the right mix of people onboard.  Just seeing the impact that SimpleNexus is making on the industry is his motivator to constantly do more.

Expansion Through Acquisition

Today’s vendors and service providers have to offer more. So, how are they doing? Some are going the acquisition route.

For example, Richey May, an accounting and advisory firm serving the financial services and real estate industries, has acquired two IT consulting firms that will enable the company to offer a more robust spectrum of IT consulting services for its financial services clients.

Arrow Partnership, a nationwide provider of management and IT consulting services, and Corporate Blue, a cybersecurity and managed IT services firm, will join the recently launched Richey May Technology Solutions division of Richey May. Both acquisitions will enable Richey May to address the growing IT demands of its mortgage banking clients, which include the needs for cloud-based managed services, strategic technology management consulting and cybersecurity risk assessments.

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“Arrow Partnership and Corporate Blue have excellent reputations for providing a wide range of IT consulting services that span multiple industries,” said Ken Richey, founding partner of Richey May. “As the demand for strategic IT planning and compliance intensifies, these acquisitions will ensure we are able to meet the needs of mortgage lenders for years to come.”

Founded in 2003 and based in Denver, Colorado, Arrow Partnership specializes in technology management, governance, risk, compliance and security consulting services, and digital marketing. Arrow Partnership’s managing partner and co-founder Chan Pollock will join Richey May as executive director of the firm’s technology consulting practice, while senior practice leader Garry Woods will head up the company’s governance, risk and controls practice.

Corporate Blue, based in Southern California, provides IT security, virtual chief information security officer services, cloud security and managed IT services. Mike Wylie, co-founder and CEO of Corporate Blue, will join Richey May as a director in the firm’s cybersecurity practice.

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“In this day and age, strategic IT decisions are a cornerstone of any company’s financial health and potential for growth,” said Wylie. “I am delighted to join Richey May, a company firmly committed to helping companies leverage technology wisely to achieve their goals.”

“I’m thrilled to be joining Richey May and have been extremely impressed with their capabilities and dedication to helping lenders run more efficient, profitable and secure businesses,” said Pollock. “I look forward to leading the firm’s technology management consulting practice and working directly with clients to ensure they receive the highest level of expertise in the mortgage industry.”

Richey May Technology Solutions is a results-driven division of Richey May offering the full spectrum of technology solutions, including cloud services, cyber security, marketing technology, governance, risk, controls, privacy and technology management consulting. Led by technology experts with decades of cumulative experience in executive IT roles, the team is focused on providing pragmatic, real-world solutions that deliver value to their clients’ business.

Also, Sandler, LLC (d/b/a Sandler Law Group), has acquired the business operations of McGlinchey Stafford & Youngblood and Associates PLLC (MSYA), a premier closing and fulfillment services provider for the mortgage lending industry.

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This acquisition further enhances the mortgage compliance and origination ecosystem built by regtech investor and regulatory expert Andy Sandler. Asurity Technologies, a leading provider of compliance management and mortgage loan document technology, expands its operations into mortgage closing and fulfillment. All legal services previously undertaken by MSYA will now be performed at Sandler Law Group.

“With this acquisition, Asurity Technologies and Sandler, LLC have further implemented our strategy to set a new mortgage industry standard for economically efficient and fully compliant software and transaction support services,” says Andy Sandler, CEO of Asurity Technologies and Managing Partner of Sandler, LLC.

“We are excited to join the family of companies Andy Sandler has built to offer our clients expanded mortgage closing services. We are now able to provide mortgage lenders access to a powerful ecosystem with known experts in legal, compliance, services, and technology. This is a great opportunity to provide the marketplace with deeper resources and increased efficiencies,” says Vicki Murphy-Gee, Vice President of Sales, Asurity Services and Executive Director, Sandler Law Group.

Asurity Technologies now provides a full range of compliant mortgage documents and mortgage closing and fulfillment services including outsourced closing functions and CD preparation and legal review, wire orders, funding, and shipping, through a team of over 150 mortgage lending specialists and technologists and affiliated legal experts at Sandler Law Group.

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.

Keeping Turned Down Borrowers In Your Pipeline

The difficulty of establishing and maintaining a reliable pipeline of new business has become readily apparent across the mortgage industry. Low credit scores, subpar credit profiles, and rising cost of lead generation and acquisition have taken their toll on the price per lead and, consequently, the total cost of origination. Furthermore, the shift from a refinance to a purchase market has only made it more difficult to drum up new business, adding to the frustration experienced by many loan officers in this sector.

In years past, loan officers relied heavily upon in-house generation of leads. Those leads were typically of higher overall quality, and the prior business relationships removed many of the barriers to conversion common to novel sources of business. However, as many in the mortgage industry are now being forced to look outside of their own organizations for new sources of business, they are often stymied by the sheer number of consumers who simply do not qualify for financial products because of their credit profiles.

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According to a report published by the Federal Reserve Bank of New York, more than one-third of all Americans have a FICO score of 620 or below. Furthermore, the Consumer Financial Protection Bureau revealed that over 45 million adults either do not have a credit score or are un-scorable. There are 300 million people in the United States (that number includes children), and 15 percent of them do not have a credit score. All too often, banks simply tell those people who fall outside qualifying parameters that they do not have the necessary credit, and implore them to come back if and when their circumstances change. There are no mechanisms in place to assist these potential clients, and the time and resources spent acquiring and attempting to convert those leads is seemingly wasted.

The question that every lender and loan officer should be asking themselves is: “Is there any way to salvage even a fraction of those rejections by turning them into qualified applicants?” The answer is yes, and the best way to go about doing so is to form strategic partnerships with entities that specialize in credit remediation and rehabilitation. By forming those partnerships, lenders are able to tap into a previously inaccessible market, while broadening the spectrum of customer services that they offer to current and prospective clients and remaining compliant with various federal regulations.

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Some lenders have recognized the need to steer unqualified applicants toward resources that could help them improve their credit, but have reservations about forming these partnerships with third parties. One of the main reasons that loan officers are reluctant to refer a lead to a third party is because they fear relinquishing control over a lead in which they’ve already invested considerable resources. This is why it is imperative to partner only with those organizations that offer a completely transparent rehabilitation process, and which allows the referring lender to maintain its control at every stage of the remediation process.

Ideally, the loan officer should receive assurances from its referral partners that the lead will not sold or referred to any entity other than that which referred the lead. Additionally, lenders should insist upon periodic progress updates when the referral reaches certain milestones. This type of system will allow the lender to decide how interactive it should be throughout the remediation process. Smaller lenders with limited resources may wish to simply monitor progress, while those larger lenders with greater availability of human capital may wish to be very “hands-on” in order to build a stronger rapport with their referrals. Regardless of which tactic lenders decide is best for them, it is imperative that every referring lender receives notification immediately upon the referrals’ completion of the remediation program, so that those lenders can re-capture those leads when they become qualified for the loans for which they initially applied.

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Many lenders are also beginning to toy with the idea providing remediation services, themselves, in an attempt to assuage their own fears associated with referring leads to third party partners. However, many do not realize that if they were to offer these types of services, or even provide advice regarding self-help, they could be reclassified as a “Credit Repair Organization” under federal law. If this were to happen, it could impute unwanted liability. A financial institution that gets reclassified could face fines or other penalties for failing to comply with stringent regulations imposed upon organizations or individuals who provide those types of services or advice. Forming partnerships with reputable companies that routinely provide this type of assistance would ensure that lenders are able to protect and insulate themselves, while still providing a service that many applicants need.

Aside from converting those leads that would have otherwise been unqualified into viable sources of business, strategic partnerships with third party credit remediation companies offer numerous benefits to lenders that are not as obvious. Lenders should be able to outsource the entire credit remediation process without devoting any additional resources, whether pecuniary or otherwise, to those leads that were initially unqualified. Upstanding companies should never charge lenders a fee for their services. When lenders are able to recapture unqualified leads it decreases both, the cost per lead and the average cost of origination, which are two common goals that every lender strives to meet.

Some of the more seasoned lenders may have reservations about working with credit remediation companies or making overarching changes to their business practices and policies. This is understandable, considering that they have enjoyed past success operating as they always have. However, as the industry landscape changes, lenders must adapt in order to maximize the increasingly limited opportunities that present themselves. A strong pipeline to a previously underserved, untapped market will certainly benefit those who have the foresight to access it early to take advantage of the new source of business. Strategic partnerships such as those described herein are one of the best ways to do just that, and will yield a net benefit to lenders, as they do not require the expenditure of precious resources that would be better spent on in other areas of business development. As the marketplace becomes ever more crowded, and the cost of origination continuously narrows profit margins, the adage “adapt or die” has never resonated so clearly.

About The Author

Elizabeth Karwowski

Elizabeth Karwowski is the CEO of Get Credit Healthy, a technology company that has developed a proprietary process and solution, which seamlessly integrates with the lenders’ loan origination software (LOS) and customer relationship management software (CRM) in order to create new loan opportunity and recapture leads. Get Credit Healthy helped their partners create over $200M of new loan opportunities in 2017 alone, and plan on continued growth in 2018. As a recognized credit expert, Elizabeth has been featured on NBC and Fox News, and published in a number of financial industry publications.

Tools For Success

With real estate inventory low and a new wave of first-time homebuyers entering the market, home shoppers need every advantage when it comes to finding the right house as quickly – and seamlessly – as possible. The process can quickly become overwhelming. Lenders’ expertise can make the search more effective and, ultimately, successful. In turn, more and more borrowers are turning to lenders at the beginning of their home search to ensure a better experience.

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We live in an increasingly digital world. Homebuyers have come to expect the same digital experience when buying a home as they have when buying a cup of coffee through a mobile app. Fortunately, many of us in the mortgage industry are working to facilitate this experience, by providing borrowers with various digital tools, apps and online resources that are specifically geared toward the home-buying process.

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Some of these digital resources include:

Home Search Apps

Real estate and home search apps offer a convenient way for borrowers to begin their search for the perfect home. According to the National Association of Realtors, 51 percent of buyers found their home online last year and 44 percent began their home search from a computer, tablet or smartphone. Mobile apps such as HomeScout allow prospective borrowers to see real-time MLS listings, save their favorite properties, receive same-day pricing updates and other alerts, and access local agents and loan specialists.

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Mortgage Calculators

Online calculators allow borrowers to run all the numbers before they commit and see exactly how all the variables will affect their mortgage payment. From how much they can afford, to assessing interest rates and other points and fees, these tools offer users the opportunity to the find the right mortgage product. For lenders, these tools allow us to better understand a borrower’s budget and work within it to ensure they are not only getting a house they can afford, but also the right loan to facilitate debt-free homeownership.

Making sure borrowers understand the difference between the amount they can be approved for versus what is recommended for their budget is critical when it comes to their long-term financial success. Tools such as online mortgage payment calculators help ensure borrowers are on target.

Customized Mortgage Reports and Analytics

One of the best ways lenders can offer peace of mind for borrowers is with customized reports and analytical tools that compare different loan options and scenarios. These provide prospective homebuyers with a clear breakdown of the costs and benefits of each loan option. Having this information allows them to work in real-time with their lender to tweak the details and find the right program for their situation.

Homebuyer Educational Tools & Workshops

The home-buying process can be complex and learning face-to-face with local experts is a powerful method for borrowers to learn the ropes. And, for lenders, it can further establish that initial relationship. Whether in-person or through real-time webinars, these sessions prove invaluable for borrowers, helping them understand the processes and options. It can also, if posted online, allow them the freedom to access this information from anywhere, at their own pace.

Technology Only Goes So Far

While these tools are great resources for homebuyers, there is no substitute for the value an experienced mortgage lender can provide. Whether helping to answer questions or offering insight and advice, a knowledgeable lender can be tremendous support and the greatest tool in the process.

There is no “one-size-fits-all” product when it comes to a mortgage. Matching borrowers with the right loan can be a progressive process. As borrowers take the journey to homeownership, lenders should guide them along the way through upfront underwriting to position the borrower as a reliable buyer with more negotiating power. This helps borrowers close up to two to three weeks faster than their competition. In today’s housing market, it’s essential that lenders are able to provide this option to borrowers to help them market themselves as a trustworthy buyer during a bidding war.

Often in today’s high-speed culture, the mortgage industry can promise borrowers fast approvals and underwriting, but those same borrowers can end up feeling lost. By establishing one-on-one relationships with borrowers and educating them, lenders create trust and peace of mind in the home-buying experience.

Taking the time to understand borrowers and working to meet their needs – whether digital or otherwise – allows lenders to make sure potential homebuyers have all the tools to make the best decisions. Those choices can be the first steps towards building lasting relationships.

About The Author

Whitney Blessington

Whitney Blessington is Vice President of Marketing for Churchill Mortgage, a full-service and financially sound leader in the mortgage industry. The company provides conventional, FHA, VA and USDA residential mortgages across 45 states. For more information, visit churchillmortgage.com or follow the company on Twitter, @ChurchillMtg, LinkedIn at https://www.linkedin.com/company/churchill-mortgage/ . Reach Blessington at whitney.blessington@churchillmortgage.com.

U.S. Foreclosure Activity Increases 9 Percent In August 2018 From Previous Month

According to data from ATTOM Data Solutions, there were 70,166 U.S. properties with foreclosure filings in August 2018, up 9 percent from July but still down 7 percent from a year ago. Nationally one in every 1,910 U.S. properties had a foreclosure filing in August 2018, according to the report.

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States with the highest foreclosure rates in August were New Jersey (one in every 690 housing units); Maryland (one in every 918 housing units); Nevada (one in every 984 housing units); Delaware (one in every 1,012 housing units); and Florida (one in every 1,229 housing units).

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Among 291 metropolitan statistical areas with at least 200,000 people, those with the highest foreclosure rates in August were Atlantic City, New Jersey (one in every 354 housing units); Fayetteville, North Carolina (one in every 444 housing units); Trenton, New Jersey (one in every 546 housing units); Columbia, South Carolina (one in every 807 housing units); and Bakersfield, California (one in every 864 housing units).

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Among 53 metro areas with at least 1 million people, those with the highest foreclosure rates in August were Baltimore, Maryland (one in every 871 housing units); Philadelphia, Pennsylvania (one in every 887 housing units); Las Vegas, Nevada (one in every 891 housing units); Jacksonville, Florida (one in every 982 housing units); and Cleveland, Ohio (one in every 1,012 housing units).

Lenders Should Be Aware Of This …

As a homeowner, how would you like to pay less in property taxes, or even not have to pay those taxes at all? Many homeowners and lenders are familiar with the term exemption. It’s a discount or benefit given for meeting certain requirements. Common examples are a homestead or primary residence exemption, usually a credit applied to taxes if the property being assessed is where the borrower lives. Other common exemptions are disability or disabled veteran, given to people with disabilities or who have served in the military and are now disabled. Exemptions are also usually given to people who are 65 years of age or older, or if the property is used for a special purpose, such as agriculture. Exemptions like these help people who may have trouble paying their taxes keep their properties. Exemptions also lessen the amount that a mortgage company will have to pay if it’s an escrowed account.

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The financial effect of these exemptions can be substantial. Some states will give a large credit for the exemptions. For instance, if the property is a combined Homestead and Disabled or Homestead and over 65 status, it surpasses the taxes that are assessed to the property and the borrower does not have to pay property taxes. Sometimes, like in Texas, people with certain exemptions can qualify to have their taxes deferred, so the taxes will not have to be paid taxes until they move, pass away, or try to sell the property. People in Texas also can enroll in a special installment plan. In other situations, the exemption provides a credit that lowers the total taxes that must be paid. The requirements, benefits and application process for the exemptions can vary from state to state, and often local agencies check yearly to see if the exemption still applies. An example would be checking a property with an agricultural exemption to determine the last time there was actually farming on the property). It’s always best to check with the website of each state to understand the nuances of each exemption.

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If the county discovers that a property did not qualify for the exemptions granted, a reassessment can occur. When this happens, the taxes that would have been owed if the exemption was not applied become due. As a result, the property will suddenly have delinquent taxes that lenders were not aware of and the consequences of these delinquencies can range from having extra penalties and interest added, to possible property loss depending on how the county manages delinquencies.

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It’s always beneficial for lenders to be vigilant and pay attention to what is happening with the properties on which they have issued loans. If a borrower violates a requirement for an exemption, such as not farming on land with an agricultural exemption or filing a Homestead exemption even though it’s being used as rental property or for commercial use, the lender will ultimately end up paying more or even losing the property. One way for lenders/servicers to stay on top of this information is to stay in touch with the county tax offices and assessors and pay attention to any correspondence received from them. This can be a time consuming task. If lenders do not have time to constantly monitor this information, working with a business partner that has employees trained to be experts in tax laws would be prudent. Lenders should look at keeping up with exemptions as protecting their investment and saving themselves from unwanted penalties.

About The Author

Neil Gantan

Neil Gantan is a delinquency processor at LERETA, LLC and has worked on delinquent property tax research for the last six years. He has a Bachelor’s of Science in Business Administration from Cal-State Long Beach and has participated in 6-Sigma projects and has a 6-Sigma Green Belt Certification.

Highest-Risk Cities for Floods, Hurricanes And Wildfires Underperformed Overall Market

ATTOM Data Solutions released its 2018 U.S. Natural Hazard Housing Risk Index, which found that median home prices in cities with the top 80th percentile for natural hazard housing risk have appreciated 40 percent on average over the last 10 years — 1.7 times the 24 percent home price appreciation in the overall U.S. housing market during the same time period.

For the report ATTOM indexed natural hazard risk in more than 3,000 counties and more than 22,000 U.S. cities based on the risk of six natural disasters: earthquakes, floods, hail, hurricane storm surge, tornadoes, and wildfires. ATTOM also analyzed housing trends in 2,616 cities and 440 counties — containing more than 53 million single family homes and condos — broken into five equal quintiles of natural hazard housing risk.

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“While combined natural disaster risk has not seemed to hobble home price appreciation over the past decade, the story is much different for some individual hazard risks — namely flood, hurricane storm surge and wildfire risk,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Home price appreciation in the overall U.S. housing market was double the rate of appreciation in cities with the highest flood risk and triple the rate of appreciation in cities with the highest hurricane storm surge risk over the past 10 years. The broader market has also outperformed appreciation in cities with the highest wildfire risk during the last decade, although the gap is much narrower.”

Foreclosure rates elevated in highest-risk flood cities

Foreclosure rates were lower in cities in the top 80th percentile for natural hazard housing risk, and this was true for all individual natural hazard risk types except for flood risk. In cities in the top 80th percentile for flood risk, active foreclosures represented 0.61 percent of all properties, well above the foreclosure rate of 0.38 percent across all risk categories.

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“Weather is the largest external swing factor in U.S. economics and accounts for over $550 billion per year in lost revenue and up to 76,000 lost jobs,” said Mark Gibbas, president and CEO at WeatherSource, a technology company that provides global weather and climate data along with advanced analytics. “Weather can have an enormous impact on homeowners and the housing market.  When big weather events such as hurricanes, tornados and hail hit, many homeowners suffer financial hardship from various sources such as lost wages and losses due to inadequate insurance. And while the impact on homeowners can be severe, hurricanes like Harvey can change the landscape of the housing market region wide, including shifts in the number of available homes and shifts in home values.”

Cities with the highest flood risk also posted seriously underwater rates (loan-to-value ratio of 125 percent or higher) above the overall market average — 8.9 percent of all homes with a mortgage compared to 8.5 percent nationwide. Tornado risk was the only other individual natural hazard risk factor with seriously underwater rates above the market average in the highest risk cities — 10.0 percent of all homes with a mortgage.

Buyers paid a premium for homes in highest-risk cities in 2018

The report also shows that homebuyers so far in 2018 paid an average 1.0 percent premium above estimated market value for homes in cities with the highest natural disaster risk while homes in cities with the lowest natural disaster risk sold at an average 3.7 percent discount below estimated market value.

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The exception to this trend was in cities with the highest flood risk, where homes sold at an average 2.4 percent discount below estimated market value, cities with the highest tornado risk (2.2 percent discount below estimated market value), and cities with the highest hurricane storm surge risk (1.4 percent discount below estimated market value).

Counties and cities with highest natural hazard risk index

Among the 2,616 cities analyzed in the report with sufficient housing trend data, those with the top 20 highest natural hazard housing risk indexes were all located in the following metropolitan statistical areas: Oklahoma City, Oklahoma; San Diego, California; Clearlake, California; San Jose, California; Madera, California; Riverside-San Bernardino, California, Bakersfield, California; Houston, Texas, Santa Cruz, California; and Huntsville, Alabama.

Among the 440 counties analyzed in the report with sufficient housing trend data, those with the highest natural hazard housing risk indexes were Oklahoma County, Oklahoma (Oklahoma City); Monroe County, Florida (Key West); Santa Cruz County, California (Santa Cruz); Santa Clara County, California (San Jose); and Marin County, California (San Francisco).

Among those same 440 counties, those with the lowest natural hazard housing risk indexes were Milwaukee County, Wisconsin (Milwaukee); Muskegon County, Michigan (Muskegon); Cuyahoga County, Ohio (Cleveland); Kenosha County, Wisconsin (Chicago metro); and Monroe County, New York (Rochester).

Index Methodology

For its fifth annual Natural Hazard Housing Risk Index, ATTOM Data Solutions indexed more than 3,000 U.S. counties and more than 22,000 U.S. cities based on risk of six natural disasters: earthquakes, floods, hail, hurricane storm surge, tornadoes and wildfires. ATTOM also analyzed home sales and price trends in 440 counties and 2,616 cities with sufficient property data.

A risk index was created for each of the six natural hazards in each city and count with natural hazard data available. Each natural hazard index was divided into five categories of risk: Very High, High, Moderate, Low and Very Low based on a severity scale. Those six natural hazard indexes were summed to create a Total Natural Hazard Index. The maximum index for each category of risk is 60, and the maximum possible total index score is 360.

For the home sales and price trends analysis, the indexes in 735 counties and 3,441 cities were split into five equal groups (quintiles) matching the aforementioned five categories of risk.

Flood zone data is based on flood zones created by the Federal Emergency Management Agency (FEMA), and the level of risk was based on the percentage of homes in each county located in high-risk flood zones: A, A99, AE, AH, A.

Earthquake data is from the United States Geological Survey (USGS), and the level of risk was based on the probability of a magnitude 5.0 earthquake in each county.

Tornado data is from the National Oceanic and Atmospheric Administration (NOAA), and level of risk was based on the Destruction Potential Index (DPI) for each county. DPI is calculated using number of tornados, path of tornados in square miles, and intensity of tornados on the Fujita scale (FO to F5).

Wildfire data is from the United States Department of Agriculture Forest Service and Fire Modeling Institute, and risk level is based on the percentage of homes in each county located in “Very High” or “High” Wildfire Hazard Potential (WHP) areas.

Hurricane storm surge data is from FEMA and the National Hurricane Center (NHC), and risk level is based on the percentage of homes located in flood zones identified as having a risk of “storm-induced waves”: V and VE.

Hail data is from NOAA and the risk level is based on the average number of hail storms per year in each county with hail that exceeds 1-inch in size over the past 15 years.