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Magazine Feature Story

*Giving It To You Straight*

**By Phil Huff**

***It’s hard to do something truly original. I’ve been in the industry for a total of 18 years, and I can’t tell you how many times I’ve heard from companies that are touting “groundbreaking” solutions, when they’re actually just offering different versions of the same old, same old. We hear certain superlatives—innovative, revolutionary, state-of-the-art—used over and over to the point that they become virtually meaningless. If you ask around, you’ll probably hear that it’s because no one wants to buy polished up versions of the original. We like brand new things. The marketing folks will probably say that you can’t simply tell the plain truth. You’ve got to make it sizzle.

****Our industry is a nuts-and-bolts practice. It’s supposed to be based on the plain truth. There isn’t inherently—and probably shouldn’t be—a lot of sizzle in our industry. Especially now. It’s not exactly a secret that for millions of Americans, it’s pretty darn tough to get a mortgage these days. The private mortgage securities market is on life support at best. Credit requirements feel like passing through the eye of a needle for a lot of good, hardworking Americans who just want to own a home. And as for lenders, you guys are faced with so many new regulations and guidelines that scrubbing a loan has turned into a near-religious process.

****I bring this up because a lot of folks have asked me: why, after a five-year hiatus from the mortgage technology field, have I decided to re-enter now? I’ll tell you why. In a nutshell, opportunity.

****The reason eLynx grew to be as successful as it did was because the industry presented an opportunity and we worked day and night to capitalize on it. The short story is that the industry needed a way to transmit documents and data quickly and securely, and we gave it to them. We weren’t the only provider in the industry to do this. We just did it better than the other folks. The mortgage business was different then. We were in one of the industry’s most powerful refi booms and guidelines were loose. Basically, it was the exact opposite of the industry we’re facing today. Except for one thing. Opportunity.

****When I first started speaking with the folks at Platinum Data, the bell that kept ringing in my ears was the call of opportunity. I couldn’t believe what started as a tiny little company 11 years ago in Orange County, California had created a technology that could accurately address the biggest unaddressed problem that’s been brewing under the industry’s surface since the crash of the market—and that the industry as a whole just hadn’t caught on to it.

****It doesn’t take a genius to figure out that our industry is in dire need of fixing a few problems. What I found curious was that the vast majority of the industry’s attention is being placed on borrowers. First we took a look at them. Then we took out our magnifying glasses. Then we put them under microscopes. I’m not knocking the process. Borrowers are a critical part of the mortgage package. It’s vitally important to make sure they are who they say they are and to verify that what they say is true. But borrowers are not the only part of a mortgage transaction. There’s also an equally important component: collateral. There’s just one issue. Relatively few are verifying the validity of property appraisals with the amount of rigor they’re verifying borrower information.

****Can you imagine an industry where a borrower can enter the words “excellent credit” on a loan application and just have the lender—and investor, for that matter—take it at face value? Can you imagine credit “review” technologies that simply scanned loans to make sure that the borrower filled in the blank fields on the application? Without oversimplifying things, that’s what a lot of folks are doing with appraisals. And while the GSEs have specific guidelines for verifying borrower income and credit, they aren’t requiring that same level of scrubbing for appraisals. Not yet, at least. And that’s where the opportunity part comes in.

****I believe this opportunity, at this time in the industry, eclipses any other. Right now, all eyes in the industry are on the valuation segment. When you take the crucial nature of housing values with regard to the overall health of the real estate market, and the risks that lenders and investors take on with a mortgage, and couple that with the capacity for today’s technologies to dig deep enough to provide an inarguable validation of the completeness and accuracy of every single aspect of an appraisal, I think we’re right around the corner from an industry-wide adoption of a far more intricate level of appraisal verifications.

****Sometimes the truth can hurt. But getting to the plain—and sometimes ugly—truth is the only way we’ll get this industry back on track. If I were an investor, I wouldn’t want to invest a couple hundred thousand dollars in a loan that’s collateralized by a property with a value that I’m just pretty darn sure is legitimate. I want to be absolutely, positively sure that when I’m investing in a securitized loan, that my security is what I think it is. If I find out down the road that I’ve been sold a loan with an inaccurate collateral assessment, guess what? I’m making you buy it back. And yes, it does happen. Faulty appraisals are a major cause for loan repurchases, which aren’t just painful for lenders. Think about the homebuyers and sellers who are forced to place their dreams on hold because someone failed to do the job correctly. The truth is no one in the mortgage process has the time or money to waste on a bad appraisal.

****If we look at the industry’s recent track record, we can see a pattern. An industry-wide problem arises, for example, the prevalence of fraudulent information about a borrower’s income. Investors start adopting solutions, like requiring proof of income or scaling back on loose guidelines. Then the government gets involved. Over and over, especially throughout the past few years, we’ve seen an increase in federal legislation and other mandates. In the appraisal industry, lenders already have to abide by new Interagency Guidelines, USPAP guidelines, FHA requirements and the GSEs’ rules for the Uniform Appraisal Dataset and Universal Collateral Data Portal. We’re even seeing new standards being set by the Consumer Financial Protection Bureau. In other words, as far as an industry-wide appraisal clampdown goes, it’s already happening.

****Now, I want to make it clear that I wouldn’t have returned to the industry to join a company that was out to rape and pillage during one of the industry’s weaker moments. Platinum Data didn’t jump into the market at the first sign of weakness. The company has been around for more than a decade. It was started by a very smart man named Rocky Donathan, with whom I have the fortune of working, side-by-side, every day. Rocky and his team have done an amazing job in the past few years with the company. Steadfast, staunch and strong, Rocky guided this company into triple digit growth for the past two years—and that’s without any marketing and advertising. He and I share a lot of the same values. We believe in providing the industry with the best solution on the market, and doing so at a fair price. As corny as it sounds, at the end of the day, we just want to help make things better—for lenders, investors, borrowers and the industry as a whole.

****It’s Rocky’s vast knowledge of the industry that infuses our technologies with the precise solutions our industry needs. Platinum’s RealView appraisal review platform is like an appraisal review software, not on steroids, but on nuclear fuel. While other systems review for blank fields and basic field validations, RealView looks at thousands of industry standard appraisal review guidelines, and covers 1,300 data points. It checks the status of the appraiser’s license. It reviews public records. It even incorporates MLS data. It provides quantitative and qualitative scoring. And there’s more. Without getting into too much tech talk, it also incorporates a business rules engine that allows custom rules to be implemented in literally hours, while other systems are still taking weeks or even months to roll out new versions of code. That means, for example, if a lender wants to be alerted on specifics, like any appraisal within a certain zip code where comparables fall outside of a certain radius, RealView can be customized to do that in a couple of hours. All told, no one even comes close to doing what RealView can do. I wouldn’t be here were the platform any less.

****It feels good to be back in the industry. In the few short months since I joined the company, I’ve gotten a warm welcome, a fast ramp up and an even faster education. I’m working alongside some of the brightest minds in the business and I’ve gotten to know a host of enthusiastic customers, companies that credit our technologies for their exponential growth, say we’re the only company that enables them to provide “underwriter-ready” appraisals, and even label our platform as “revolutionary.” For a returning veteran who’s used to being sold the sizzle, it’s nice to serve up the steak and have your customers put the sizzle on it for you. I feel great about being here at Platinum Data, a place where—without fluff, without frills, without sizzle—at the end of the day, we’re just people helping people.

****ABOUT THE AUTHOR: Phil Huff, former CEO and co-founder of eLynx, is the CEO of Platinum Data Solutions. Platinum Data provides technologies that help mortgage lenders, servicers, investors and appraisal management companies value collateral, and identify and manage collateral risk. Its online platform and analytical tools are being used by hundreds of companies to perform due diligence, prevent buybacks and protect billions of dollars in assets across the U.S.  The company’s RealView system revolutionized the way the industry reviews appraisals, while its AVM offerings provide a truly unbiased perspective on collateral valuation. Platinum Data Solutions is based in Aliso Viejo, California and was founded in 2002.

Magazine Feature Story

*You Need More Than Just An eSignature*

**By Sharon Matthews**

***The recent announcement that the IRS, and eventually the FHS, will begin accepting electronic signatures on the 4506T is generating a lot of interest in the mortgage industry. Even technology-savvy lenders must currently manage the 4506T on paper, or outsource to a company that does. This results in a disjointed process and creates the opportunity for errors or slowdowns. So, will the widespread adoption of eSignatures truly remove the final barrier to a completely electronic set of mortgage documents? Most lenders are finding that there’s more to integrating eSignatures than just installing a new tool.

****eSignature technology has undeniable benefits, such as increased productivity and cost savings, but by itself, may not be the panacea it is made out to be. In many ways, eSignatures have become a commodity, with companies offering eSignature technology sprouting up everywhere. However, to realize the full potential, lenders must leverage the technology within a broader solution set. Lenders using the IRS announcement to introduce electronic documents into their processes should evaluate eSignature technology in context of the entire workflow. For example, where do the signed documents go, how are they stored, and what impact does a mixed media file have on underwriting? What happens when documents are electronically signed, but require the return of additional conditions or stipulations? And what is the impact on compliance if a document is sent electronically but isn’t signed?

****The answers are easily found in the best practices of lenders leading with a best-in-class consumer experience. They are taking an approach where the workflow is designed with an electronic process as the normal way of doing business, and where paper is the casualty of an inefficient and costly alternative.

****Manage Exceptions

****In this highly competitive market, lenders need a solution that provides multiple options within a single, integrated workflow. Electronic documents may be the preferred method for exchanging information with the consumer, but it cannot be the only option. RESPA regulations require lenders to issue a GFE within three business days of an application. If for some reason the consumer does not pick up the electronic GFE in the allotted timeframe, or indicates that he does not want to receive the documents electronically, the lender must handle this exception. This could be time consuming and difficult to manage, not to mention error-prone, especially with any kind of volume in the loan pipeline. Given the cost of failing to comply with regulations, an eSignature solution that handles exceptions automatically quickly pays for itself. Having an electronic signature package with an integrated print and mail feature is the best solution that addresses total cost and compliance objectives.

****Imagine this ideal scenario after you receive an application for a mortgage: Your loan officers process the necessary information and prepare the disclosures. They then electronically send the disclosure documents to the consumer to sign. An email is automatically sent to the consumer announcing the availability of the documents and requesting their action. If the consumer doesn’t respond in time to meet the three-day requirement, the loan officer is notified and the documents are automatically printed and mailed to the address on record. No intervention is required by your loan officers and you remain in compliance automatically.

****Sounds too good to be true? This is exactly the type of solution, one that gracefully handles exceptions within the workflow, that lenders need in today’s market. If there isn’t an option to automatically “fall out” to paper processing, eSignatures may actually reduce productivity, because lenders will have a second workflow to manually process paper disclosures. This is a reality of electronic signatures in the mortgage industry that few technology vendors want to discuss. But it is vitally important in a mortgage scenario and should be factored into any ROI calculation.

****Effective Interaction

****The interaction required to complete the disclosure process is just the beginning. Frequently, once those documents are signed, additional conditions and stipulations must be met before the loan is approved. This requires lenders to collect documents from the consumer. For example, income verification may require a pay stub or a copy of a W2. The challenge for lenders is to track these requests, get the requested materials, and then integrate them into the loan file. Technology can, and should, be used to manage this process as well.

****An effective solution allows lenders to interact with consumers in different ways. Electronic documents, electronic signatures, paper copies, and even fax may be employed to collect the information needed in the loan file. For convenience, a document solution should provide multiple channels to distribute documents and data. Even though mobile and electronic technology is gaining traction, many processing groups still rely on fax machines. Good solutions can produce a fax cover page with an embedded barcode that identifies the documents or conditions being met. When the fax is received from the consumer, it is electronically processed and the documents are placed in an imaging or document management system without human intervention. More advanced systems allow a consumer to upload a document directly, or even take a picture of the document and return it using their mobile phone.

****A Mobile Strategy

****Mobile phones have clearly become a standard aspect of daily life for the American consumer. According to statistics compiled by the Federal Reserve System in March 2012, 87 percent of the U.S. population has a mobile phone. Many are smart phones connected to the Internet. Mobile devices continue to grow in popularity as a method for managing financial information. In 2011, 20 percent of the total U.S. mobile audience indicated that they conducted some type of financial-related activity from their mobile device. Mobile banking is poised to expand further over the next year, with financial information usage increasing to one in three mobile phone users by 2013. Clearly, today’s consumers expect information, even sensitive or protected financial information, on their mobile devices.

****Lenders looking to increase their competitive position and improve customer service are taking advantage of mobile trends. A number of institutions already allow consumers to obtain financial account information and conduct transactions, including paying bills, transferring money, and ordering services. Document delivery and signature services can and should be incorporated into this experience. Just as consumers can see their checking account balance on their phone or tablet, they should also be able to apply for a mortgage, receive their disclosures, sign the documents, and return any requested information from their mobile device.

****Supporting mobile users has many benefits for a lending institution. In addition to improvements in customer loyalty, reaching consumers quickly shortens processing times and improves retention in the application process. A 2011 study by eLynx showed that lenders who used electronic delivery and signature services shortened the loan cycle by 4-5 days. The study documented solid improvements in productivity. The data also suggests that lenders with shorter application-to-close times may have a competitive advantage when a borrower is shopping among several lenders. Borrowers who received information quickly were more likely to commit to the transaction, resulting in a 3-4% improvement in the number of applications that go to closing. The ability to connect with your borrowers on a mobile device when they are away from their home or office can mean the difference between an application that goes nowhere and a closed loan.

****A Complete Record

****Enabling the fast and efficient exchange of information is critical to improving the customer experience and the competitive environment. But ultimately, all this electronic data must be managed and tracked to increase efficiency. General eSignature services may not be prepared to handle the transparency and audit needs that a mortgage transaction requires.

****For complete traceability, all documents both sent to, and returned from, a consumer should be captured in a single loan file. As documents are signed and submitted, the loan officer can be notified and the returned documents automatically stored in an imaging system or in an electronic folder. This provides a complete record of consumer interaction. Additionally, loan officers can monitor this electronic folder to proactively manage the application process. If a disclosure package is not returned as expected, the loan officer can reach out and contact the consumer to assist with the decision making process. Ultimately, this impacts the rate of approved applications that go to a closing.

****Finally, using an electronic delivery service that is integrated with an imaging system or electronic folder provides a single, authoritative source for loan documents and improves productivity for mortgage processors, closers, and interested third parties. No more chasing down the latest copy of a document or pulling a document only to find out that it’s been revised three times. There is one place that contains all the documents for the loan. This has immediate benefits if a lender or mortgage broker is audited.

****Beginning in 2012, the Consumer Financial Protection Board is instituting a mortgage examination procedure. Both lenders and non-bank originators are subject to evaluations in several areas, including loan disclosures and terms, closing, and fair lending practices. Examiners show up on site requesting access or copies of documents on a number of loans. If those documents can be provided electronically on demand, the audit process is streamlined. The same benefits also hold true for the complex audit requirements enforced by many state regulators.

****The Competitive Edge

****Audit, regulatory, risk, competitive, and consumer satisfaction needs are important issues facing mortgage lenders today. eSignature is a key technology, but it is only a point solution.  Lenders should evaluate eSignature vendors and tools within the context of the entire workflow. Merely signing a 4506T electronically is not going to achieve the results that lenders need in today’s environment. The best solutions are those that gracefully handle exceptions, support the return of additional documentation, are connected to an electronic loan folder, and provide multiple methods for interaction including electronic, fax, and hard copies. These types of solutions exist, and are being deployed by technology savvy lenders who are enjoying a competitive edge.

****ABOUT THE AUTHOR: As President and CEO, Sharon Matthews oversees the overall operations of the company and is responsible for the growth of eLynx’s market leadership position providing data-driven document distribution, collaboration, and connectivity services for the financial services, mortgage banking, and real estate industries. Matthews came to eLynx with more than 25 years of senior executive experience running profitable large technology and software companies.

Magazine Feature Story

*Selling To The Next Generation*

**By Barbara Perino and Rebecca Walzak**

***Mortgage lenders would benefit from being aware that Generation Y (those who were born between 1980 and 1994) are beginning to enter the home purchase market more and more and their knowledge about the home-buying process is very different than previous generations even their Generation X brothers, sisters, cousins and friends (those born between 1964 – 1979).This will impact loan officer strategy as well as the mortgage banker processing the loans.

****How has this evolved over the years? Let’s look back:

****Up to now:

****When World War II ended, the American Dream of home ownership became very mainstream. Servicemen returned home reclaiming jobs they left and with the GI Bill of Rights in place, were able to purchase affordable housing. Mortgages were cheaper than renting and banking relationships created security for acquiring mortgage loans more easily. The typical house (some called the Levittown house) had two bedrooms, one bath and an eat-in kitchen and was on average 750 sq. ft in size. Family type relationships were established with local banks and mortgages were made by simply having a meeting with the bank president who drew up the paperwork, called the borrower in and got everything signed, quickly. Families would typically live in these houses for the life of the loan and beyond, many times increasing the size of the house by adding on rooms as the families grew.

****In the 1960s, the average size of new homes increased on average to 1,450 square feet as families became larger, society became more prosperous and people started spreading out into the suburbs. Mortgages were still based on the relationships people had with their bankers and savings and loans institutions. The same is true going into the 1970s. The average size of homes increased again, half of which had two or more bathrooms. These homes were typically passed down a generation when the parents decided they wanted to retire and move to a retirement home, hit the road in an RV or move in with the children.

****Even after the financial collapse of the savings and loan industry at the end of the 1970s, people were still buying homes with ease. Transitioning into the 1980s and at times paying double digit interest rates, the average homeowner could still afford a mortgage. Homes continued to get bigger, averaging 2,000 sq. ft. in size. The higher mortgage rates didn’t deter people from getting mortgages as there were new loan programs to choose from. During this timeframe, more and more families were dual-income households with the mother working to help sustain a lifestyle of convenience and comfort. Divorce was also becoming very prevalent in our society, thus more opportunities for more mortgage loans. The economy was booming in the eighties and people were buying second homes in locations where the family could go on vacation and enjoy the surroundings whether a beach community or a mountainous hideaway.

****In the early 1990s, the average home had four-bedrooms and a separate family room, formal dining room and a ½ bathroom located near the kitchen or entrance and a two-car garage. Homeowners consisted of the Traditionalists generation (our parents who were typically still in their original houses) and the Baby Boomers who by now are saving money, taking vacations, having larger families, enjoying life, living in larger homes. Moms were still working, supplementing the family income. Moving up into even larger homes was becoming more common in many areas of the country.

****By the 2000s Americans had incurred a lot of debt. Mortgage loans, two-car payments, installment debt, college funds, etc. By the mid-2000s home equity loans and second mortgages were a very common practice which has impacted many homeowners today as the daily news and the state of the mortgage industry can attest. No need to talk anymore about this as this article is focusing on what younger Generation Y is going to do going forward with being able to afford a mortgage and what the process is going to have to look like for them

****Throughout the eras of the 70s, 80s and 90s, the mortgage loan process encompassed a mountain of paperwork both for the borrowers to review and sign and for the mortgage company to process. Computers were used for streamlining some processes but our society relied more on filling out the paperwork by hand with pen and ink.

****Generation X (1964-1979) started buying homes in the 1990s. This generation took advantage of “first time homebuyer” programs offered by Fannie Mae and Freddie Mac. Their personalities were very similar in some ways to their parents (typically Baby Boomers) in that they are somewhat traditional in their thinking, conservative in their views and buying a home was very much a goal and focus of investing money into the American Dream. This generation typically bought in a community where other families live with a focus on good schools, community involvement and quality of living. They were much more comfortable to embrace computers and new technologies. The lenders were/are using vendors who supply software products to help make the lending process streamline and convenient although there is still a lot of paperwork to complete and process. Some of this generation used the services of on-line lenders such as Quicken Loans or Lending Tree with ease and liked the efficiency of a push of a button to help alleviate spending time doing it the old way.

****Generation Y (1980- 1995) is going to influence and change the way we view lending going forward. This generation stayed home with family much longer because of the cost of living, the lack of well paying jobs and high student loan debt. They have watched their parents struggle with debt, layoffs, loss of investments, sour economy and many other factors.  This is the technology generation where they embrace doing things more efficiently through the use of social media, smart technology and not necessarily seeing the need to interact as much with people in the process as past generations have. Nor do they have the patience to sift through lots of paperwork which they feel is a waste of trees. It’s just as easy to sit in your room or at home and handle any transaction that needs to be handled by the simple click of a mouse, getting the phone with loan officer or even communicating via Skype.

****Today’s first time home buyers have a vastly different vision on what they want in a house. Many turn their noses up at the large homes and traditional homes their parents had to have. What’s changed?  It’s partially a matter of mindset that has shifted since the Great Recession. These young people equate oversized houses and their large price tags with the real estate crash. They are realizing that a home is not necessarily an investment, thus many are renting. This next generation of home buyers has too much college debt in many cases, to buy a house. Realtor, Greg Fielding believes that high college debt is a problem because indebted graduates can’t take on further debt to become homeowners. He also feels that this could impact the starter-home markets for a decade or more as the next generation of first-time homebuyers is so burdened down with debt. This generation will have a harder time qualifying for home loans and will certainly qualify for smaller loans, until these debts are paid off.

****So what is going to possibly change in the mortgage lending process? Loan officers are going to have to understand the mindset of these younger generations when selling mortgage loan programs these young consumers can afford. What is going to be the appeal for them to want to acquire a mortgage? What will they have to do differently? What different tools and knowledge will they have to have? How will their interpersonal skills change? How will the cloud technology make the lending process more efficient?

****Something else to think about … the new generations of managers coming in to the mortgage industry is going to be another opportunity for change to occur. Selling services and products to Generation Y will require a new set of sales tools. Identifying and understanding the types of emotional roadblocks with this generation will have to be addressed as part of the sales cycle. With technology managing how things are done, will these managers ever see the value of seeing their customers face to face or would they rather just communicate electronically? What will these technological savvy individuals require in order to buy products and services?

****All of this is food for thought and needs to be taken seriously. How will you embrace change? If you choose to ignore they are different, be prepared to struggle with “this is the way we have always done it”. Eventually you will be forced to try something new.  A suggestion would be to start having conversations with your leadership and possibly including younger generation from the staff. Get their feedback and opinions on what they would like to see change. Read some books on what other industries are doing to embrace a new way of being successful. The technology industry has already changed the way they keep their employees engaged and loyal. Google, Zappos, 3CInteractive are great examples of companies filled with Generation Y. Why not break the mold and get creative, embracing  change that is coming.

****ABOUT THE AUTHOR: Barbara Perino is a Certified Professional Co-Active Coach guiding her clients who are executive leaders and their staff. Barbara has been trained through The Coach Training Institute (CTI) located in San Rafael, CA. She completed a Coaching Certification Program through CTI and the International Coaching Federation (ICF). Prior to becoming a coach, Barbara was a 16-year veteran of the residential mortgage industry in a national sales management capacity for property valuation and residential mortgage service providers.

****ABOUT THE AUTHOR: rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.

Magazine Column

*Recovery Tips: Expanding Your Footprint*

**By Randy Schmidt**

***Today’s highly competitive market and tech savvy consumers are challenging lenders to deliver a robust online lending experience if they want to compete and expand their mortgage footprint.

****For instance, despite the challenges of the local and national economy, The Juniata Valley Bank remains a well-capitalized, fiscally sound community bank, ready and able to meet the credit needs of the markets it serves. Those needs are many and varied as they face a rapidly evolving constituency.

****”Throughout 2012, we will continue to deliver financial services through traditional community offices, offering face-to-face service from friendly personnel seven days a week; in addition, we are expanding our electronic delivery system to meet the demands of an increasingly technology-dependent clientele. Text banking and full service Mobile Banking are now augmented by online delivery of mortgage-related loan products” stated Suzanne Booher, VP Marketing/Facilities/Security for The Juniata Valley Bank.

****What lenders are realizing is that the online mobile revolution is expanding at an unprecedented pace. With over 5 billion mobile subscriptions world-wide, that number eclipses the combined penetration of PC’s, landlines and TV’s. Smartphones are projected to surpass 110 million by 2015 according to eMarketer. The statistics clearly demonstrate that today’s consumers are online, they are mobile, and are increasingly “tech savvy”.

****Lenders need to be where their potential borrowers are. A recent study showed that there are 51.5 million potential homebuyers born between 1979 and 1991. This group of people commonly referred to as “millennials” comprise nearly a quarter of the total US population. This represents a critical audience for lenders and virtually every member of this group can be found online. By not having an online channel, lenders are missing out on a tremendous opportunity.

****It is essential to make online offerings more interactive. Lenders must engage their borrowers and instantly provide them with the information needed to make an informed buying decision. In addition, lenders should provide secure communications with their customers to keep them informed during the entire lending process.

****In order to better serve their customers, The Juniata Valley Bank made the decision to expand their online offerings. To successfully offer an interactive online experience, they looked for a partner that fully understood what customers expect online, delivers the security that their institution demands and has the experience to quickly implement.

****Suzanne stated, “We partnered with one of the industry’s most trusted sources for online lending to collaborate with our team to deliver a secure online user experience. Data-Vision’s highly skilled staff explained what borrowers are looking for and were extremely easy to work with”.

****Members of today’s “do it yourself” generation, prefer to have an interactive online experience available to them 24 hours a day, 7 days a week, 365 days a year. This online experience should contain all of the tools necessary to allow the borrower to gather the information they need to make a decision and then allow them to execute on that decision.

****>> A variety of mortgage calculators

****>> A pre-qualification process

****>> An easy to use and secure application process

****>> Instant approval capabilities

****>> Up-to-date product and rate information

****>> Up-to-date loan status information

****>> A secure message center between the Loan Officer and the Borrower

****>> Electronic delivery of initial disclosures and other documents

****>> On demand live chat

****In addition, having a partner that understands today’s compliance challenges, the demands of tech savvy borrowers and the expertise to quickly deliver solutions to market is absolutely critical.

****>> Proven track record of successful implementations

****>> Highly skilled staff that can drive implementation process

****>> Understands mortgage market complexities

****>> Professional and easy to work with

****>> Responsive to individual institutions’ needs & requirements

****>> Award winning customer support

****”Data-Vision was able to deliver on our aggressive implementation schedule and exceeded our expectations to deliver to our customers a dynamic user experience”, stated Suzanne.

****Today’s consumer is online and mobile. Smartphone and tablet use is growing exponentially. People are constantly connected and expect access to information 24/7. Lenders must align their products and services with the profound, permanent shifts that online mobile is causing, or risk relevance with a client base that has forever been changed by anywhere, anytime accessibility.

****ABOUT THE AUTHOR: Randy Schmidt is President of Data-Vision, Inc. and is responsible for overall operation and strategic planning for the company. Randy became involved in the IT side of mortgage banking almost 30 years ago and has been involved in numerous projects on both the origination and servicing side of the business. In 1993, Randy co-founded Data-Vision, Inc., in Mishawaka, Ind. as a Web design company.

Magazine Column

*Your Voice: A Question To Ponder*

**By Jeff Wirsing**

***You may be familiar the popular party game “Would you rather,” whereby a question is posed which involves having to choose between two (often undesirable) choices. It’s a game that provokes a lot of fun and interesting discussions, introspection and critical thinking. Here’s a “Would you rather” question for mortgage originators.

****”Would you rather…originate loans or change people’s lives”

****On the surface, this question may seem simple and an easy one to answer. I think all of us would quickly say that we want to change people’s lives. But once you start to think harder about the question you may find it’s not as simple as it appears.

****An originator who endeavors to “change” someone’s life is taking on a pretty significant responsibility. Not every mortgage originator is comfortable in that role. After all, what gives an originator the right to think they are in a position to change someone’s life? And if they are in a position to change someone’s life how do they go about doing it? And do they have the tools to do it?

****Americans are struggling with multiple converging obstacles that impede their ability to achieve their financial goals. The solution to their problems is really quite simple and mortgage originators are uniquely qualified to help by providing “just-in-time” information.

****Over the next few weeks I’m going to blog about the important role that mortgage originators can play (if they choose to) in changing the lives of millions of Americans and, at the same time, re-build the mortgage industry, re-establish confidence in the value of home ownership and have more fun and get more personal enjoyment out of being a mortgage originator than ever before.

****Now let’s begin a discussion which explores the huge opportunity that the mortgage origination industry has when it comes to playing a significant role in changing people’s lives.

****Let’s begin by acknowledging what we all know. A home purchase or refinance involves arranging and negotiating what equates to the largest financial transaction and debt obligation in most people’s lives. That alone says a lot with regard to the importance of the event. But what has gone unnoticed, and what I want to discuss, is how homeownership, the home finance transaction, and the future of America are intertwined, and more specifically, how the mortgage origination industry is uniquely positioned to play a key role, if they choose to, in leading America back to greatness.

****Given that eighty percent of wealth in America is created through real estate, namely homeownership, the mortgage origination industry is engaging with Americans at a critical point in their lives. So again I ask the question, “Would you rather originate loans or change people’s lives?”

****Clearly this discussion isn’t intended for those in the mortgage industry who choose to embrace, and cling on to, the concept that mortgage financing is a “commodity” and the only thing that matters is the rate, the fees and the loan program. So if that’s you…you are excused. But if you believe that your role as a mortgage professional is to educate consumers, and help them make decisions that are sustainable and serve their needs today and in the future, I’d like to talk with you about using the mortgage transaction as a “teachable moment”, and an opportunity to provide “just-in-time” information to Consumers, and in the process be a force in leading America, and Americans, back to greatness.

****For those mortgage originators who believe their role is to “advice” clients, and not just take orders (…as in “would you like fries with that?”), it’s necessary to have a clear appreciation of the state of average Americans. So let’s consider the following facts:

****>> Despite living in one of the wealthiest countries in the world the rate at which people save for retirement in the U.S. is nearly zero. Outside of employer sponsored retirement plans individuals save virtually nothing for retirement and are relying on social security.

****>> Over 65% percent of Americans live paycheck-to-paycheck because they need their next paycheck in order to pay their upcoming bills.

****>> 66% of Americans have a net worth of less than $25,000.

****>> The average American household sends 18% of their income each month to creditors other than mortgage lenders.

****>> The average American with a credit file has over $18,000 in non-mortgage debt.

****>> 80% of wealth in America derives from real estate…namely home ownership.

All of the above statistics were gathered prior to the 2008 credit crisis, the subsequent mortgage meltdown and the bursting of the house bubble. When totaled, and then added to the resulting stock market crash, Americans in the last 5 years suffered a 30-50% loss in wealth. And given the current U.S. and international political and economic climate, (and despite my efforts to see things as “half-full”), all indications are that average Americans are going to struggle in the coming years when it comes to achieving their financial needs…let alone their financial dreams.

****So, as we revisit the “Would you rather” question of originating mortgage loans or changing peoples’ lives, it’s clear that Americans have a need. And in the world of business…”Where there’s a need…there’s an opportunity”. The silver lining for the mortgage industry is that it has the ability to take the lemons it’s been sucking on these last three years and turn them into lemonade.

****In 2007, the mortgage origination industry generated approximately $3 trillion in originations. That equated to providing financial services to nearly 10 million Americans (1 in 5 homeowners). Despite the massive drop off (a loss of nearly 2/3’s in total volume) over that last three years the mortgage transaction still puts the origination industry in direct contact with a significant percentage of consumers annually. But more importantly, the context of this interaction is like no other industry. Originators are assisting Consumers with a transaction that involves a significant and life impacting financial decision. But what’s unique is that in addition to the “transaction” that’s occurring, originators do something that almost no other financial services professional does, which is compile and assess the Consumers credit history (i.e. the credit report) and financial situation. As such, mortgage originators are in the unique position of being able to provide “just in time” financial education and information at one of the most “teachable moments” in people’s lives.

****In an age when America’s priorities have shifted from being a savings nation to being a spending nation, and where the momentum has dramatically changed from living a life of self-reliance to one of dependence, the time has come for America to return to its roots. It’s time to promote thrift as a core American value and to make financial education and responsibility a national priority.

****Financial education, integrated into the act of getting a mortgage, is the new paradigm that will, and must, be embraced by the mortgage origination industry. It’s possible for the mortgage industry, and individual Originators, to adopt a simple and commonsense financial education platform that can be blended with the mortgage origination process, that utilizes tools for self-administered financial decision making and which promotes financial self-reliance and being prepared for retirement.

****Next month I’ll discuss specifics on how this can be accomplished and how Originators, and the mortgage origination industry, can move beyond just originating mortgages to actually changing people’s lives.

****ABOUT THE AUTHOR: Jeff Wirsing is President and Co-Founder of GreenBar America LLC. GreenBar offers a new mortgage loan pre-qualification system that mortgage originators will use with every person in the U.S. that seeks to finance a home. The program, called GreenBar, guarantees that the mortgage decision puts the Borrower in the safest possible financial position.

Understanding The News: An Appraisal Checklist Emerges

*An Appraisal Checklist Emerges*
**AMC Ensures Compliance**

***Currently, banks are expected to keep up with the numerous and changing regulations associated with appraisals, which is a very time-consuming endeavor. Many banks don’t have the resources to keep current, leaving themselves open to fines and regulatory scrutiny. So, MountainSeed Appraisal Management, a full-service appraisal management outsourcing firm for commercial and residential appraisals, now offers a free Compliance Checklist to help banks and lenders remain compliant with Dodd-Frank Act regulations. Here’s the full story:

****“What banks don’t know can hurt them,” said Carl Streck, CEO of MountainSeed Appraisal Management. “Banks and appraisers can use the Compliance Checklist at no cost to make sure that many of the i’s are dotted and t’s are crossed on their appraisals when it comes to regulatory compliance.”

****Banks and appraisers only need to put in their name, company, state and an email address to download the checklist from MountainSeed’s website. The Compliance Checklist, designed to give a bank a brief snapshot of key appraisal regulations, will help banks evaluate and prepare themselves to address appraisal issues in their next regulatory exam.

****The Compliance Checklist includes important legislative developments, key interagency guidelines, the TILA Final Rule requirements, and Fannie Mae and Freddie Mac’s Appraisal Independence Requirements (AIR). By checking boxes next to each item, banks and appraisers ensure they are aware of the various regulatory requirements under all categories.

****“With the ever-changing regulatory landscape, it’s been challenging for banks and appraisers to be aware of the basic regulations required for residential and commercial appraisals, so this checklist is sure to be a big help,” Streck said.
MountainSeed also added blog postings along with its white papers on regulatory compliance for the appraisal community as new features to its website to help educate appraisers on new regulations from the Dodd-Frank Act. Banks and appraisers go through the same process—at no cost–to download white papers as they would to download the Compliance Checklist from the www.MountainSeedAMC.com website.

Market Analysis: A Partnership That Matters

*A Partnership That Matters*
**By Tony Garritano**

***When you’re the leader in a space, who you partner with matters. When the GSEs chose Veros to run the new appraisal portal that was significant. Today I learned about another partnership like this that I think matters. Mortech, Inc., a mortgage technology software company specializing in solutions for mortgage bankers and secondary market teams, announced an exclusive new strategic alliance with AllRegs, the market leader when it comes to providing mortgage information. Under the new agreement, the Mortech Product & Pricing Engine (PPE), a tool built into MarksmanLMP, will be the exclusive PPE recipient of AllRegs’ massive loan product library, which includes loan programs for more than 70 investors, some of whom only share information with AllRegs. Here’s the scoop:

****“We’ve worked with Mortech for a number of years and wanted to create a more strategic alliance with the company,” said Dan Thoms, executive vice president and chief strategy officer at AllRegs. “We’ll be supporting loan originators through Mortech in a number of new ways, including providing educational services and special origination and compliance-focused webinars to their lender customers.”

****“This alliance solidifies MarksmanLMP’s leadership position in the market,” said Don Kracl, president of Mortech. “Marksman’s Lending Management Platform has never been a traditional PPE. In fact, that’s only one aspect of the functionality included. Because we also provide so many other tools to help loan officers qualify opportunities before entering the LOS, it was difficult for simple PPEs to compete. Now with AllRegs providing its exclusive loan library data to only to Mortech, it adds even more value to the MarksmanLMP process.”

****Previously, AllRegs provided its data to a number of PPE providers in the marketplace, but decided earlier this year to concentrate its efforts on a single strategic alliance. AllRegs subscribers will still have complete access to its AllRegs LoanLibrary data, whether they use a commercial PPE or not.

****MarksmanLMP qualifies mortgage leads prior to moving them to the LOS by simplifying, automating and organizing the entire mortgage lending process, from lead acquisition to assessment and marketing to processing. Online window shoppers are converted into customers quickly and easily, freeing up the LOS from the clutter of deals that will never close in the process.

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.

Market Analysis: Another High-Profile Vendor Goes Mobile

*Another High-Profile Vendor Goes Mobile*
**By Tony Garritano**

***We at PROGRESS in Lending have always seen the value in going mobile. That’s why we launched the PROGRESS in Lending app for the iPad back in October of last year. I encourage you to download the free app in iTunes today. Our concept was to create an industry app that not just displays our content in this newsletter and in our magazine, but rather an industry app that houses content from a variety of sources. For example, we just added our eighth industry Twitter account to the app. You can follow all these different industry Twitter accounts from within the app. We also have contributed white papers from over 20 different companies and video content from us and four other sources. We are the first B2B mortgage publishing company to have an iPad app, but the app is not just about PROGRESS, it’s about the whole mortgage industry. So, it gives me great pleasure to write about vendors in the space that are now going mobile, as well. Here’s the latest vendor to move in this direction:

****ISGN has launched a new smart phone application for its Gators browser-based settlement services and vendor management system designed to assist appraisers, title abstractors and closing agents out in the field. The app soon will be available for the iPhone at the Apple Store where it can be downloaded. ISGN also plans to support apps for the Android phone, the Blackberry and other smart phone platforms.
ISGN has adapted mobile technology to the mortgage industry with the new Gators smart phone app, designed to assist appraisers, title abstractors and closing agents. The app enables the vendor to accept, decline or update orders while out in the field providing more efficient use of their time. The smart phone app replaces multiple manual tools for appraisers, such as note pads, voice recorders and cameras. The app guides the appraiser through the necessary process required to complete a home inspection by organizing the information and photos of the interior and exterior of the home. In addition, the app also can organize the information and photos needed for the three comparable homes required for an appraisal.

****The Gators smart phone app can organize the appraisal report, generating significant time and cost savings for appraisers. With the app, appraisers at the end of the day can upload appraisal data for the appraisal report, including photos and voice recorded comments from their smart phones to their office computer or ISGN’s global processing facilities and the next morning receive back the completed appraisal report allowing appraisers more time out in the field.

****“Gators new smart phone app can create huge time savings for appraisers. The app is very detailed and walks appraisers out in the field through what photos and information are required for the report, including comps,” said Ankush Dham, director of technology solutions for ISGN. “With the app, appraisers don’t have to come back into the office to accept or deny appraisal orders, greatly enhancing productivity in the field.”

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.

Winning The Battle For The Borrower: Here’s How You Get More Business

*Here’s How You Get More Business*
**By Judy Margrett**

***I started in the mortgage business back in 1985. It’s hard to believe. I’ve originated, did sales management, you name it. In that time I’ve seen a lot of changes. Being on the lender side got me thinking. What would help me or my originators get more quality business? The more I thought about it, the more I became convinced that automated loyalty was the solution. A lot of people say you can’t automate marketing, but you can. Here’s how:

****If we take a short trip down memory lane, initially it was all about digitizing your signature, pulling data from the loan origination system and sending out marketing materials every 90 days. Basically it was about replicating your marketing process with software. Things have evolved. If you think about it, the LOS started out as just a more automated 1003, but today the LOS is the system of record and does much, much more.

****The first difference in today’s market vs. the market of 1985 is that you need a Web-based tool that goes beyond just sending out marketing materials. Marketing is about relationships, not transactions. The industry has been transaction based for too long. It’s not about the deal, it’s about the people. The days of just closing any deal because you have a willing investor are long gone. Today it’s about quality, not quantity. And guess what, if you originate quality loans the quantity desired will follow.

****Similarly, marketing itself has also evolved. What do I mean? You can’t expect any one solution or approach to work. As the saying goes: There is no silver bullet. Marketing should be about using tools like social media, e-mail, texting, and, yes, sending out old-fashioned print media, as well.

****Automated programs maximize the retention of current clients and the revival of past clients. These pre-determined sequences of strategically timed marketing communications typically run for up to three years (or more) and can be extended at any time. A well-configured automated program lays the firmest possible foundation for long-term success – not only by generating a steady flow of referrals, repeat sales and cross-sales from a loyal audience, but also by ensuring maximum response to on-demand custom campaigns, thus creating a lasting relationship.

****Statistics show that every client/borrower has at a minimum 15 to 20 referrals. And we as people automatically refer things like restaurants all the time naturally. What does that mean for your business? If you focus on the relationship and have a holistic approach to marketing you can close more business. In my next column we’ll continue this conversation as I give some solid strategies on how you can use this technique to get more business.

Judy Margrett is President of The Turning Point, Inc. The company’s flagship product is MACH3, a mortgage-specific CRM and automated marketing engine. With more than 20 years’ experience in mortgage banking, Judy was an early advocate of technology-based marketing solutions, especially for nurturing key business relationships. Recognizing the demand to maximize resources within business enterprises, she works closely with industry leaders to guide The Turning Point’s development of advanced mortgage-specific solutions. She can be reached via e-mail at judy.margrett@turningpoint.com.

Understanding The News: What A Mess

*What A Big Mess*
**Putting The Meltdown In Perspective**

***PROGRESS in Lending has learned that there were 66,000 completed foreclosures in the U.S. in April 2012 compared to 78,000 in April 2011 and 66,000 in March 2012, according to CoreLogic. Since the start of the financial crisis in September 2008, there have been approximately 3.6 million completed foreclosures across the country. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Here’s the details:

****Highlights as of April 2012:

****>> The five states with the highest number of completed foreclosures for the 12 months ending in April 2012 were: California (142,000), Florida (92,000), Michigan (60,000), Texas (58,000) and Georgia (57,000). These five states account for 48.8 percent of all completed foreclosures nationally.

****>> The five states with the lowest number of completed foreclosures for the 12 months ending in April 2012 were: South Dakota (62), District of Columbia (162), North Dakota (541), West Virginia (598) and Hawaii (601).

****>> The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (12.0 percent), New Jersey (6.7 percent), Illinois (5.3 percent), Nevada (5.0 percent) and New York (5.0 percent).

****>> The five states with the lowest foreclosure inventory were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.9 percent), Nebraska (1.0 percent) and South Dakota (1.4 percent).

****“There were more than 830,000 completed foreclosures over the past year or, in other words, one completed foreclosure for every 622 mortgaged homes,” said Mark Fleming, chief economist for CoreLogic. “Non-judicial foreclosure markets, like Nevada, Arizona and California, completed two and a half times as many foreclosures over the past year as judicial foreclosure states.”

****“The inventory of homes in foreclosure in judicial foreclosure states is growing, but this increase is being more than offset by declining inventories in non-judicial states where the processing timelines to clear a foreclosure are shorter,” said Anand Nallathambi, chief executive officer of CoreLogic. “Nationally the inventory of homes in foreclosure decreased 0.1 percent from what it was a year ago at this time, and has leveled off over the first four months of 2012.”