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Ellie Mae Expands HELOC, Dynamic Data Management And Mortgage Insurance Support

Ellie Mae has launched a new major release of Ellie Mae’s Encompass digital mortgage solution. The latest release will help lenders of all sizes originate more loans, lower origination costs and shorten the time to close with compliance, efficiency and quality. Key highlights include enhanced HELOC support, Encompass Dynamic Data Management and Mortgage Insurance Support for the Ellie Mae Total Quality Loan Program.


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“Ellie Mae is offering a complete digital mortgage solution to help our customers succeed in today’s competitive marketplace,” said Jonathan Corr, president and CEO of Ellie Mae. “With this new release we’re offering innovation, enhancements and support so our lenders can grow their businesses with HELOCs, operate more efficiently using Encompass Dynamic Data Management, provide a more streamlined mortgage process with centralized service ordering, and achieve complete compliance.”

Key highlights for the Encompass 18.4 release include:

Enhancements for Expanded HELOC Support: The 18.4 release includes the first phase of a comprehensive solution expansion to streamline the application and underwriting of HELOC loans. To support the unique investor requirements for calculating HELOC payments, both initial and qualifying, Encompass now includes a set of configuration options for both, including support to calculate interest-only and amortizing payments on the basis of a selected rate, a fraction of principal balance, or a percentage of principal balance.


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Mortgage Insurance Service for Ellie Mae Total Quality Loan (TQL): Ellie Mae TQL leverages secure, single sign-on and necessary, best-of-breed services to automate processes, and applies quality checks throughout the mortgage lifecycle to reduce resource costs and operational friction. Enhanced integrations with Arch MI, MGIC and Radian offer a more streamlined mortgage insurance (MI) ordering process. Encompass MI Service gives customers automated ordering, side-by-side rate quote comparisons, and an automated allocation model. The new service also offers faster processing, increased visibility into order history, and the ability to monitor key data changes and alert Encompass users when to re-order a rate quote or MI certificate.

Encompass MI Service within Ellie Mae TQL improves operational efficiencies by allowing automated ordering and reduces manual steps needed such as re-authentication. Customers can reduce risk by monitoring material data changes in the loan file through a single source of record that maintains all transactions and communication inside of Encompass. Additionally, the process helps to ensure that the information is accurate, organized and securely transmitted.


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A New Way to Automate Data Entry: To increase productivity and enhance accuracy, Ellie Mae is releasing a new scenarios-based rule engine for Encompass designed to automate data entry across any form used during the loan origination process. The new engine, Encompass Dynamic Data Management, brings Ellie Mae one step closer to its vision of automating everything automatable in the mortgage industry and helps lenders deliver a digital mortgage experience to borrowers.

“Encompass Dynamic Data Management is an amazing new feature that provides Encompass Administrators an incredibly powerful set of tools for automating data input in Encompass,” said Adam Ard, Implementation and Development Lead, New American Funding.  “We are extremely excited for the release of Encompass Dynamic Data Management functionality because of the dramatic improvements it provides in flexibility, maintainability, visibility and control of systematic data automation.  This will greatly benefit companies of all sizes with its intuitive settings structure and seamless end user experience.”

ComplianceEase Adds New Home Equity Audit Functionality

ComplianceEase has updated its flagship platform—ComplianceAnalyzer—so it is now able to audit home equity lines of credit (HELOCs) for state licensing requirements in most states.

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ComplianceAnalyzer with TRID Monitor has been able to audit both closed-end and open-end mortgages for federal, state and local requirements, including TRID compliance, and for state predatory lending issues for some time. ComplianceEase has now enhanced the system to allow non-banks, banks and credit unions to audit all liens in most states in which they are licensed. Currently, the system covers more than 80 licensing types in the 42 states that account for more than 90 percent of home equity originations in the United States.

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Depending on the state license, the system can test HELOC originations for:

>> Interest rates

>> Restricted fees

>> Late fees

>> Grace periods

>> Prepayment penalties

“According to TransUnion, approximately 5.5 million HELOCs were originated in the last five years, and that number could rise to 10 million over the next five years,” said John Vong, president of ComplianceEase. “With rising home prices creating equity, one estimate says that 44 million homeowners now have more than $6 trillion in ‘tappable’ equity and could be candidates for home equity lines and loans.”

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Vong added, “Not surprisingly we are seeing a growing interest from banks and now non-banks in this category. From a compliance perspective, however, the patchwork of different state regulations for both real estate and consumer lending has presented challenges for lenders with multi-state footprints. Our new enhancements to ComplianceAnalyzer mean that lenders can now use their preferred system for first mortgage compliance to reduce exposure to potential state licensing rules for HELOCs as well.”

Credit Union Turns To Technology To Boost Its HELOC Business

Technology Credit Union (Tech CU) has chosen The FirstClose Report to support its home equity products. The FirstClose Report provides title search, flood certification, valuation and property information with lien protection insurance instantly and offers credit union lending divisions all they need to review and approve these loans.

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As one of the Bay Area’s largest credit unions, Tech CU provides innovative financial products for all stages of its members’ lives, including personal banking, wealth management, private banking, commercial lending and business banking. The company serves more than 75,000 members including employees from many of Silicon Valley’s top companies. It’s one more, from a long list of financial institutions that view The FirstClose Report as a tool that can help them compete more successfully.

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With The FirstClose Report, lending institutions can receive all the data they need to qualify applicants instantly, thereby reducing closing times from 40+ days to less than 10 days, lowering costs by 40% on average, and reducing risk with $500,000 of A+ XIII rated lien protection insurance per loan.

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“Tech CU wanted to get on the express lane to lower costs, quicker turn-times and shorter closing time frames and saw The FirstClose Report as a way to make that happen,” said Timothy R. Smith, Chief Revenue Officer of FirstClose.

“The FirstClose Report will enable us to work more efficiently and effectively, which ultimately benefits our members — helping to improve their experience,” stated Angie Hernandez, SVP, Retail Credit Administration at Tech CU.

Credit Union To Boost HELOC Business

United Heritage Credit Union has chosen The FirstClose Report to support all of its Home Equity Lines of Credit (HELOCs) and Home Equity Loans. The patent-pending FirstClose Report provides credit union lending operations with instantaneous title search, flood certification, valuation and property information with $500,000 of lien protection insurance. Headquartered in Austin, Texas, United Heritage Credit Union serves communities in Austin, Tyler and Central Texas, and is the next in a long list of financial institutions who view The FirstClose Report as a way to gain a competitive edge.

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Because The FirstClose Report delivers everything that it needs to approve these loans instantly, United Heritage Credit Union can dramatically reduce closing times from 40+ days to less than 10 days. At the same time, The FirstClose Report helps cut costs by an average of 40% and reduces risk with $500,000 of A+ XIII rated lien protection insurance per loan.

“United Heritage Credit Union saw our product as a way to get on the express lane to lower costs, reduced turn-times and shortened closing windows,” said Timothy R. Smith, Chief Revenue Officer of First Lenders Data, Inc. (FirstClose).

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“By utilizing The FirstClose Report, we are now better positioned to effectively streamline our costs and services for United Heritage Credit Union Members. Their unique solution offers us all the instant data we need to close our home equity loans and lines more efficiently,” stated Keith Varney, VP of Real Estate Lending at United Heritage Credit Union.

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New Report Helps Lenders With HELOCs

The FirstClose Report, an instantaneous, bundled report developed by First Lenders Data, Inc. (FirstClose) that delivers a title search, flood certification, valuation, and property information with $500,000 of lien protection insurance on every loan, is helping loan officers effectively address the steady stream of Home Equity Lines of Credit (HELOCS) that are resetting through 2018. The patent-pending FirstClose Report enables lenders to order the documents they need to quickly and effectively refinance resetting HELOCS – all delivered within 30 seconds, within one report.

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“When considering the sheer number of resetting HELOCs, we saw a real need to help mortgage lending operations lower costs, reduce turn-times and shorten closing windows,” said Timothy R. Smith, Chief Revenue Officer of First Lenders Data, Inc. (FirstClose). “Our FirstClose Report offers lenders who are proactively reviewing their loan portfolios with an eye toward refinancing those HELOCS a way to reduce closing times from 40+ days to less than 10 days by delivering an instant report that includes everything lenders need, while reducing costs by an average of 40%, and decreasing risk with $500,000 of A+ XIII rated lien protection insurance per loan.”

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The solution enables lenders to offer their customers a better “application to closing” experience by virtue of its shortened length, improved accuracy and increased efficiency. At the same time, the drastic reductions in time, money, and risk improves the lender’s ability to better serve their customers and compete more successfully in an industry filled with compliance hurdles and increased costs.

Specifically, the FirstClose Report instantly provides lenders with:

>>Instant owners and encumbrance/property reports, including $500,000 of lien protection insurance

>>Instant property valuations including quarterly AVM validation

>>Instant flood certifications – including life of loan monitoring and a copy of the flood map

Lenders can choose from a myriad of property valuation providers and any of the top flood certification companies in the industry. In addition, lenders can customize the report to include add-on services including property condition reports, desktop valuations, 2055 drive-by appraisals, 1004 full appraisals, and full ALTA Title insurance for larger loan amounts and lower FICO scores. By design, The FirstClose Report satisfies all the risk and compliance requirements placed on lenders.

“Our FirstClose Report is an effective way for lenders to address the resetting HELOCs in their loan portfolios,” Smith said. “By delivering everything their lending operations need within 30 seconds and for significantly less than what they pay today, we’re achieving our goal of helping lenders reduce their closing times, increase their efficiencies, and drastically reduce their cost and risk.”

Wells’ HELOC Revamp Is Long Overdue

You Can Download This Full Article As A PDF HERE

NEW-GeorgeYThe Wall Street Journal broke the story that Wells Fargo last November had begun requiring most of its customers to start paying principal – not just interest – on their home equity lines of credit (HELOCs).

This prompts three questions: First, what took the financial press so long to find this out? Second, what took Wells, the biggest residential mortgage and home equity lender in the country, so long to do this?

And third, why did the bank feel that it had to keep such a good and long overdue idea such a big secret?

The collapse of the housing bubble was devastating to the HELOC business, previously a fast-growing, low-risk, highly profitable business for the vast majority of retail banks and credit unions who offer the product. But since the peak year of 2009, lines of credit outstanding have dropped 26%, from $714 billion to $526 billion in the first quarter of this year, according to the Federal Reserve.

Even worse, lenders have lost billions on soured HELOCs they’ve had to write off. The delinquency rate on HELOCs stood at 3.37% at the end of the first quarter, down from 4.69% at the peak in early 2012 but still more than 10 times the 0.37% rate in 2003, before the housing bubble burst.

HELOCs used to be one of the safest consumer loans banks made, with delinquency rates well below 1% industry wide. But that figure skyrocketed during the recession as lenders made loans in anticipation of continued high home prices.

That was the same bet millions of homeowners made, taking out bigger and bigger HELOCs to build swimming pools, borrow more on their credit cards, and make additions to their homes they didn’t really need. The banks should have known better, of course, but they didn’t.

Until Wells made its historic move, the vast majority of HELOC borrowers have only been required to make interest-only payments for the first 10 years, during which time they can continue to draw down their lines, up to their maximum. Starting in year 11, but only then, borrowers are required to start making principal payments, too. Before then, of course, borrowers had the option of making principal payments.

When the housing market crashed, too many homeowners couldn’t make those higher principal payments.

It’s not clear yet how many lenders will follow Wells’ lead, although two of the banks’ biggest national competitors, Bank of America and J.P. Morgan Chase, have said they’re considering it. But other smaller lenders say they will continue to offer I-O HELOCs for the first 10 years to differentiate themselves from Wells.

For example, Navy Federal Credit Union, the nation’s largest credit union, says it has no plans to change or eliminate its I-O options on both its fixed-rate home equity loans and HELOCs, although it acknowledges that only a “small percentage” of its members choose interest-only loans.

It’s not like Wells has priced itself out of the market by demanding principal payments from day one instead of 10 years out. Typical monthly payments for most Wells HELOC customers will rise, of course, but not as much as you might think. For example, the interest-only payment on a $30,000 HELOC at the current 4.875% APR would be about $121. A fully amortizing payment including principal would be $158.83, a difference of less than $40 a month.

However, by doing so, the homeowner will pay off his loan and build equity in his home faster, or free up more equity to borrow against.

It’s clearly a more borrower- as well as lender-friendly idea. You have to wonder why it’s taken this long for a lender to make the move.

Yet while Wells is making this more responsible change, both for itself and its customers, a growing number of lenders are once again starting to make HELOCs up to 100% of the value of the property, one of the main reasons for the collapse of the housing bubble and the demise of the HELOC product.

Proving once again: Too many people in the mortgage business just never learn from their mistakes. It’s good to know that at least one lender has, if a few years late.

About The Author

[author_bio]

Wells’ HELOC Revamp is Long Overdue

Early this month the Wall Street Journal broke the story that Wells Fargo last November had begun requiring most of its customers to start paying principal – not just interest – on their home equity lines of credit (HELOCs).

This prompts three questions: First, what took the financial press so long to find this out? Second, what took Wells, the biggest residential mortgage and home equity lender in the country, so long to do this?

And third, why did the bank feel that it had to keep such a good and long overdue idea such a big secret?

The collapse of the housing bubble was devastating to the HELOC business, previously a fast-growing, low-risk, highly profitable business for the vast majority of retail banks and credit unions who offer the product. But since the peak year of 2009, lines of credit outstanding have dropped 26%, from $714 billion to $526 billion in the first quarter of this year, according to the Federal Reserve.

Even worse, lenders have lost billions on soured HELOCs they’ve had to write off. The delinquency rate on HELOCs stood at 3.37% at the end of the first quarter, down from 4.69% at the peak in early 2012 but still more than 10 times the 0.37% rate in 2003, before the housing bubble burst.

HELOCs used to be one of the safest consumer loans banks made, with delinquency rates well below 1% industry wide. But that figure skyrocketed during the recession as lenders made loans in anticipation of continued high home prices.

That was the same bet millions of homeowners made, taking out bigger and bigger HELOCs to build swimming pools, borrow more on their credit cards, and make additions to their homes they didn’t really need. The banks should have known better, of course, but they didn’t.

Until Wells made its historic move, the vast majority of HELOC borrowers have only been required to make interest-only payments for the first 10 years, during which time they can continue to draw down their lines, up to their maximum. Starting in year 11, but only then, borrowers are required to start making principal payments, too. Before then, of course, borrowers had the option of making principal payments.

When the housing market crashed, too many homeowners couldn’t make those higher principal payments.

It’s not clear yet how many lenders will follow Wells’ lead, although two of the banks’ biggest national competitors, Bank of America and J.P. Morgan Chase, have said they’re considering it. But other smaller lenders say they will continue to offer I-O HELOCs for the first 10 years to differentiate themselves from Wells.

For example, Navy Federal Credit Union, the nation’s largest credit union, says it has no plans to change or eliminate its I-O options on both its fixed-rate home equity loans and HELOCs, although it acknowledges that only a “small percentage” of its members choose interest-only loans.

It’s not like Wells has priced itself out of the market by demanding principal payments from day one instead of 10 years out. Typical monthly payments for most Wells HELOC customers will rise, of course, but not as much as you might think. For example, the interest-only payment on a $30,000 HELOC at the current 4.875% APR would be about $121. A fully amortizing payment including principal would be $158.83, a difference of less than $40 a month.

However, by doing so, the homeowner will pay off his loan and build equity in his home faster, or free up more equity to borrow against.

It’s clearly a more borrower- as well as lender-friendly idea. You have to wonder why it’s taken this long for a lender to make the move.

Yet while Wells is making this more responsible change, both for itself and its customers, a growing number of lenders are once again starting to make HELOCs up to 100% of the value of the property, one of the main reasons for the collapse of the housing bubble and the demise of the HELOC product.

Proving once again: Too many people in the mortgage business just never learn from their mistakes. It’s good to know that at least one lender has, if a few years late.

About The Author

[author_bio]