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Borrower Communication Comes Of Age

Recently, the Consumer Financial Protection Bureau announced a new electronic closing pilot program to allow consumers the ability to review mortgage documents prior to reaching the closing table. This follows closely on the heels of changes to Regulation B back in January that required lenders to provide borrowers copies of appraisals or other written valuations promptly upon completion. Add these to the existing regulations requiring documents to be delivered to the borrower within three days of application, and it seems that you are being asked to send information to your borrower at every turn.

The intent of these regulations isn’t to just provide borrowers with the appropriate documents, but to give them time to review, analyze and ask questions. The last thing anyone wants is for the borrower to be surprised when they get to the closing table. An informed borrower is a happy borrower.

So how exactly do you accomplish this? The answer is with a secure communication platform. A secure communication platform allows you to not only deliver documents to the borrower throughout the entire loan process, but also allows for the borrower to securely ask questions and return documents back to you if needed.

When considering a secure communication platform, there are several things to consider. The first of course is security. While many lenders would never consider sending sensitive information via e-mail, it is amazing how many sensitive documents are delivered back to lenders in this manner. Paystubs, W-2’s and previous year’s tax returns all contain information that should never be sent via e-mail. Unfortunately, many borrowers have no other option of delivering this information back to the lender.

The next thing to consider is availability. Today’s borrowers are always on the go. For any communication platform to be effective, it must be able to be accessed via mobile devices. By making sure that your platform is mobile ready, you are assured that you can always reach your client, and more importantly, they can always reach you.

Workflow is another factor to look for in a communication platform. What happens if a request goes unanswered? What if the borrower doesn’t consent to receiving their documents electronically? To stay compliant with all of the regulations it is very important to be notified when manual intervention may be required.

The last, but definitely not the least, thing to look for is a complete audit trail. Being able to produce proof positive that documents were delivered on time and that all ESIGN requirements were met, along with a history of messages exchanged between lender and borrower will keep you in good graces with your auditors.

As I mentioned earlier, lenders are being asked to deliver information to borrowers at every turn. By installing a secure communication platform you can not only meet both the letter and intent of these regulatory requirements, but make the entire loan process faster and smoother for the borrower.

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The Return Of Non-Agency Lending?

Caliber Home Loans, Inc., a residential mortgage origination and servicing company, today announced the launch of its new Non-Agency Mortgage Program, which adds four new products to the company’s innovative and diverse portfolio of mortgage solutions. The product line expansion allows Caliber to help more consumers achieve their goal of homeownership by expanding the options available to eligible and qualified borrowers.

“At Caliber, we recognize that there are qualified, creditworthy borrowers with home financing needs that are not being served by the agency and government programs that are currently available in today’s marketplace,” said Joe Anderson, Chief Executive Office of Caliber Home Loans. “Our goal is to increase the opportunities available to borrowers to expand the boundaries of homeownership and allow more qualified borrowers to enter the market. We are confident that our prudent underwriting guidelines, coupled with the way we have structured each of these products, creates a winning combination for both Caliber and the customers we serve. As one of the industry’s leading mortgage lenders, we are thrilled to be able to offer more home financing choices to even more customers.”

Caliber’s new Non-Agency Mortgage Program focuses on the needs of four types of borrowers, and includes:

>> Caliber’s “Fresh Start” Program: This credit re-establishment program is for borrowers who may have experienced a credit event, but cannot find a program in the marketplace that meets their needs as they re-establish a strong credit history.

>> Foreign Nationals: The program offers greater flexibility to qualified borrowers who are not citizens of the United States and whose mortgage needs are not being met by the market’s current offerings.

>> Non-Warrantable Condos: Fills the needs of borrowers who currently have limited options because they are looking to finance condos in projects that are not currently eligible for loans backed by the government sponsored agencies.

>> Non-Agency Alternative: Offers expanded guidelines and qualifying considerations for asset depletion to eligible, qualified borrowers, including expanded debt-to-income ratios, an interest-only option and no prepayment penalties.

Caliber’s robust underwriting procedures ensure that every borrower has the ability to repay the loan being provided, regardless of the product or loan type.

“We take the Ability to Repay requirements very seriously and want to ensure that all of the products and programs we offer are a good fit for our borrowers at the time of their application,” said Anderson. “By conducting in-depth Ability to Repay analysis on every loan we underwrite, we give customers the peace of mind that they are purchasing a property that they can afford.”

Caliber Home Loans, Inc. is a privately-held financial services company. Caliber’s headquarters are based in Irving, TX. The company is an approved Seller/Servicer for both Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae and is an approved servicer for FHA, VA and the USDA. The company carries multiple servicer ratings from Standard & Poor’s, Moody’s, Fitch and DBRS.

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What Would Brian Boitano Do?

Prior to the start of the Sochi Winter Olympics, President Obama decided to make a political statement about oppressive Russian legislation from 2013 that has become known as the “gay propaganda” law. The president named a few openly gay athletes, including Olympic hockey star Caitlin Cahow and skater Brian Boitano, to lead the U.S. Olympic delegation to Sochi – thus giving a rainbow flag slap at his Moscow rival, Russian President Vladimir Putin, while allegedly showing his administration’s support for LGBT rights.

I am using the word “allegedly” on purpose, because the administration’s advocacy for the rights of LGBT individuals is somewhat haphazard. While the president has no trouble sending gay and lesbian athletes to Sochi to call attention to anti-gay attitudes in Russia, he is not sending anyone to Capitol Hill to call attention to anti-gay attitudes in certain sections of the U.S. housing market. Indeed, the administration continues to be silent in calling for the expansion of the federal Fair Housing Act to include LGBT Americans.

The protection of LGBT Americans in buying residential property was not among the myriad of rules and regulations stuffed into the 2,300-page Dodd-Frank Act, which was passed when the Democrats controlled both chambers of Congress. This omission was curious on two levels.

First, the Dodd-Frank Act contained language mandating that each governmental agency charged with financial regulation establishes an Office of Minority and Women Inclusion to “be responsible for all agency matters relating to diversity in management, employment and business activities.” Obviously, help for the disenfranchised did not extend beyond federal payrolls and vendor contracts.

Second, one of the authors of the Dodd-Frank Act was among the most prominent gay politicians of his time. It is a bit odd that he didn’t think about helping other gays in regard to housing discrimination protection while writing a law that realigned the housing finance environment.

In the U.S. Department of Housing and Urban Development (HUD), Secretary Shaun Donovan has stretched his authority as far as he can in regard to fighting LGBT discrimination. In 2012, his department’s operating procedures were expanded with a rule requiring the owners and operators of HUD-assisted or -insured housing make housing available without consideration to an applicant’s sexual orientation or gender identity. The Federal Housing Administration’s mortgage insurance programs and HUD’s public and assisted housing programs are covered under this mandate, which did not require congressional approval.

In January 2013, HUD made its first (and, to date, only) publicly announced enforcement of this mandate when it reached an agreement with Bank of America to settle a claim that the mortgage lender refused to provide financing to a lesbian couple in Florida. The bank paid HUD $7,500 to settle the case; whether the bank ever issued a mortgage to the couple is unknown.

In June 2013, the department released a report that was billed as “the first large-scale, paired-testing study to assess housing discrimination against same-sex couples in metropolitan rental markets via advertisements on the Internet.” Beyond that report – which focused on 50 metropolitan markets between June and October 2011 – the subject has been placed on the proverbial back burner and nothing more has been accomplished.

Without extending the Fair Housing Act to protect LGBT Americans, it will remain perfectly legal for lenders, landlords and other real estate entities to practice discrimination against this community in more than half of the states and a ridiculously large number of municipalities and counties across the country. But for reasons that remain unclear and unquestioned, the administration has made no effort whatsoever to ensure that LGBT Americans receive the same rights as other Americans that face discrimination based on race, religion, ethnic origin, physical status, veteran status and gender.

And the president’s silence on this is even more galling by his efforts to call out the Russian government for its treatment of LGBT individuals while pretending all is copacetic in the United States. One could easily remind the president about that old real estate-related quip about stone-carrying people living in glass houses. Or, perhaps, Obama should take a line from the celebrated “South Park” song about U.S. Olympic delegation member Brian Boitano and “kick an ass or two” in order to ensure that federal law will enable all Americans have proper access to residential housing.

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Why Is Poverty A Taboo Subject?

Is it possible to have a vibrant national housing market when approximately 46.5 million Americans – roughly 15% of the population – are living in poverty? Do you believe that it is realistic to imagine a strong future for housing when 48 million Americans are currently enrolled in the federal food stamps program?

Is this a temporary pothole in the road to recovery? It doesn’t seem that way. The Corporation for Enterprise Development recently released data that found nearly half of Americans live paycheck-to-paycheck, while 56% of the population has subprime credit ratings. And 44% of families averaging four people now constitute a demographic called the “liquid asset poor” – they have under $5,900 in savings.

A few weeks ago, the U.S. Postal Service’s Office of the Inspector General issued a report that stated 68 million Americans – roughly one-quarter of all households – did not have a checking or a savings account. And thanks to Obamacare, the number of Americans on Medicaid has gone up dramatically.

But if you scan through news headlines, listen to the pundits on the news station talk shows, soak up the speeches given at business conferences or just do a casual scan of your favorite social media sites, you will find almost no mention of poverty’s encroachment in today’s American society. Indeed, the word “poverty” itself is conspicuously absent.

There is a lot of political talk, led by the Obama administration, over something called “income inequality.” In this conversation, financially successful Americans are held up for ridicule – even the president has repeatedly been on the record claiming that these individuals are disrupting the economy because they are not paying “their fair share” in income taxes.

While the president and the “income inequality” crowd like to focus attention at the higher end of the national income scale, they will not focus attention at the opposite end of this spectrum. Since the 2008 recession – which took root in the George W. Bush years, the second of two recessions during his presidency, lest we forget – the level of poverty in this nation has gotten progressively worse. The recession may have ended, but the recovery never really began.

And what does this have to do with housing? Well, everything – if things don’t start to improve soon, the near-term future of housing will be bleak. That is, of course, unless you are a multifamily housing developer eager to offer accommodations for those seeking low-cost rentals.

So, what can the housing world do about this? The first step to solving a problem is to acknowledge the problem exists. Poverty cannot be treated as a taboo subject. Today’s economic miasma is showing no signs of getting better, and political posturing over “income inequality” is a stupid distraction that needs to be called out and stopped.

The second step is to force a conversation that raises ideas on how this dreadful situation can be reversed. And if it means that the industry’s leaders have to step outside of their comfort zone and force answers from elected officials and administration operatives, then this has to be done.

The third step is for companies within the industry to take proactive solutions by partnering with community development financial institutions and responsible nonprofit organizations that are making an effort to address this situation. These fine groups work without much fanfare, but their mission is critical and supporting their work will help to reverse the chaos that is freezing people in a state of economic despair.

This problem has gone on for too long and it is silly to imagine that it can be whittled away in a very short time. But time is being wasted by pretending nothing is wrong. If the current data gets worse, the prospective pool of homeowners in the very near future will shrink even further. Poverty is not somebody else’s problem anymore. If no effort is made to tackle this today, tomorrow will not be a very happy day.

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Mortgage People Never Die

What is it with the old farts of the mortgage business? They just won’t go away. For every Joe Reppert, who unceremoniously threw in the towel as vice chairman at Core Logic this summer, there are four or five “generians” of one sort or another who refuse to call it quits.

I count myself among the many who refuse to ride off into the sunset. But I’m a reporter, and I like what I do. And I’m the exception. For every reporter like me, who can remember when Fannie May was only a candy store, there are what seem like dozen of upstarts, many of whom have never bought or sold a house and have no clue what they are writing about.

But I am talking about people like Herb Tasker, a former chair of the Mortgage Bankers Association, who just keeps rolling along. And folk like John Robbins and David Kittle, two other former MBA chairmen, who just announced a start-up called the Mortgage Collaborative. Along with Gary Acosta and Jim Park, Robbins and Kittle’s new venture is a cooperative designed to empower member to compete more effectively by boosting their collective buying power.

There’s a story there, and it’s been reported in numerous outlets, including this one. But to me the interesting part is that Robbins is at it again. For crying out loud, the man has founded and operated several national companies over the course of his 42 years in the business. Hasn’t he had enough?

Apparently not. I know he likes to fish and golf – I’ve joined him on several junkets. But he’d rather work than play.

I don’t know whether Kittle can swing a nine iron, or even drop a line overboard. But he, too, has been around the bend a few times. And now he’s back, 35 years and still going strong.

I never did hook up with Robbins at the recent MBA convention in Washington, and chatted only briefly with Kittle. But I did spend sometime with Acosta, who also seems to have nine lives. He is a mortgage broker who has owned and operated several mortgage-related businesses, but his real claim to fame is as co-founder the National Association of Hispanic Real Estate Professionals.

(Park hasn’t been around as long as his partners, but he is the youngster of the group. Still, he’s no piker. He was a vice president for housing and industry relations at Freddie Mac, a co-founder of New Vista Asset Management, and is a former chair of the Asian Real Estate Association of America.)

“If there was a Mt. Rushmore for mortgage bankers,” Acosta told me, “John Robbins would be up there.”

He said guys like JR believe they can still make a contribution – and make a few bucks at the same time. “The market goes through cycles, which create new niches,” he said. “And independent mortgage bankers are more nimble, so they tend to want to fill those niches first.”

Acosta, too, wants to continue making a contribution, and he said he’ll keep coming back. As long as he and his compatriots can add something to the mix, he said, you can count on them for their knowledge, understanding and friendship. I guess it’s just the natural order.

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The Naughty Or Nice List

My grandchildren were here for Christmas and it was amazing how much they focused on whether they were on Santa’s “Naughty or Nice List”. After all, getting Furby Boom would make the difference between a successful or disappointing holiday so being good was paramount, for at least a few days. It struck me then that lenders are also faced with their own perpetual Naughty or Nice List. Only ours is not compiled by a jolly elf trying to bring happiness, but from a group of regulators trying to bring lenders’ into a transparent lending environment.

The CFPB has made it quite clear that they are collecting data from lenders, consumers and other resources. And the more data they collect the more they know about every company. So have you ever asked yourself, “What are they doing with all that data?” Or, “What do they know that I don’t?” Or, “Shouldn’t I at least know what they know?” and probably most importantly, “Ho, Ho, Ho – How can I know?” Having, using and understanding data seems to the key.

Having and using data is becoming a critical part of the day-to-day activities in any organization. On Sunday, January 12th, The Wall Street Journal included in an article on skills sets necessary in today’s job market, the need for understanding data and noted that it is “… an increasing important part of everybody’s day-to-day…” It is quite clear that everyone needs to understand data and know how it applies to you. Even more important is the need to make sure you even have the right data. This goes double for CEOs and other members of the executive management team.

So what data should management have and how should they use it to keep themselves off the “Naughty” list? All too often the only data that management members see are the production results. But is that all they really need to see? Maybe these executives should know what “big data” they need in order to give them a broader view of the organization. And just maybe they should be thinking about the data that the CFPB has collected on them and the borrowers they serve. An even more radical idea is to get industry data as well. That way it’s easy to compare your organization to everyone else and know how you stack up.

Unfortunately data is not something easily attained in this industry. We have acknowledged that data elements are not consistent and despite the best efforts of MISMO, there are still lenders who have and/or want to maintain their own propriety data. We also have systems that are inadequate at collecting the data we need and only recently have we begun to make sure the data we do have is accurate. So are lenders doomed to face regulators not knowing if they have been good or bad? What can lenders do today to give themselves a fighting chance to make it to the “Nice” list?

One way is to make use of the data that is available. Every lender now files HMDA data for example and that collective industry data is publically available. Yet how many lenders have actually used their data or the combined database to analyze their organization? How many lenders know how they compare to the industry when it comes to such things as sending our incompleteness notice or denial reasons? Well, the CFPB knows and if you are on the low end of the numbers you are certainly a “Naughty” list prospect. And that means, not just coal in your stocking, but exams and probably fines in your future.

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How’s Your Online Messaging?

Purveyors of mortgages spend most of their advertising dollars online, according to a new research report. Lenders spend a whopping 39 percent of their ad budgets online, the extensive 39-page report from Borrell Associates, an advertising firm in Williamsburg, Va., says. The other 61 percent is spread over numerous other media, with none commanding more than a 15 percent share.

Overall, lenders will spend some $10.16 billion this year on advertising, or about 4.4 percent more than they spent in 2012, according to the report.

Of that, $3.97 billion will go toward their online messages, while $1.42 billion (14 percent) will be thrown into cable TV. Also worthy of note is that some $95 million will be spent on broadcast TV, a 40 percent increased from 2012.

Lenders also will end up spending about $790 million in newspapers. That’s a 7.8 percent share of their ad budgets, and an 8.5 percent increase from last year.

That means the mortgage community is contributing to what may be the return of newspapers from the walking dead. While it is certainly too early to call it a trend, newspapers actually gaining market share in 2013, according to Borrell.

Save for a few markets, fat real estate sections in newspapers are probably gone forever, as are the clutter of homes magazines on street corners. But print “is by no means dead,” the company said in its report.

Indeed, real estate-related newspaper advertising has not only stabilized this year, it has actually increased a tad, up by 0.8% from 2012. At the same time, local magazines “are enjoying a sudden resurgence,” up 30.7%.

That’s not to say spending on digital media has faltered. Its up 16.9%, to a total of more than $15 billion, the study found. Fifteen years ago, when digital was in its infancy, it commanded less than 5% of all real estate ad dollars, Now, it holds a commanding 56% share.

But digital is not likely to grow, says the report’s principal author, executive vice president Kip Carsino. “We believe that the digital share of real estate advertising has peaked and that any future growth will be commensurate with overall growth in advertising expenditures.”

Borrell expects agent’s and brokers’ digital ad spending to peak in 2015 at $16.6 billion. After that, digital will be experience its first ever decline – and a sharp one – due largely to a mild cyclical recession in 2016, the report predicted. Than, spending on the digital medium should begin rising again.

The annual report, which sells for $995, examines the underlying trends in the resurgence of the real estate markets and breaks out spending by agents and brokers, developers, rental managers and mortgage providers.

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A Really Positive Lending Story

*A Really Positive Lending Story*
**By Tony Garritano**

***I talk a lot about technology. We also focus a lot on compliance. So, today I want to do something different. I want to tell you a great story about a lender that’s doing well. I learned that Gateway Mortgage, a privately held mortgage company offering originations, servicing and correspondent lending, announced its Omaha branch has reached record high loan volumes per month, making it one of the top performers in Gateway’s network of branches.

****The Omaha branch, which joined Gateway in January, originates loans faster with Gateway than it could previously with another mortgage company, directly resulting from the smooth onboarding process used to integrate new offices into Gateway’s network of branches and provide support from the home office to boost productivity. Gateway provides branches with robust and focused orientation and training that enables branch managers to learn about Gateway’s processes regarding compliance and loan origination. The Omaha branch also relies on a centralized underwriter so loans are opened and closed locally within their office. In addition, the lender was able to expand its staff by adding four experienced loan officers and tripling the number of employees to support its enhanced levels of productivity.

****“Gateway has given us the necessary support to grow our portfolio, expand our office and provide the best experience for our borrowers,” said Kent Geschwender, Omaha branch manager. “The organization’s overall support and commitment to branch independence has helped us to achieve significant milestones within our market.”

****“Gateway’s success begins at the local level when we start our relationships with new branches,” said Kevin Stitt, president of Gateway. “We seek to empower our new branches through comprehensive training and support that provides them with the ability to establish a foundation for long-term success with Gateway.”

****Founded in 2000, Tulsa, Okla.-based Gateway Mortgage Group LLC is a complete end-to-end mortgage banking firm that specializes in originations, servicing and correspondent lending. The company services more than $2 billion in residential mortgages through its in-house servicing, subservicing and default servicing channels.