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Critical Loan Defect Rate Drops For First Time In 2017

ACES Risk Management (ARMCO), a provider of enterprise financial risk mitigation software solutions, has released the ARMCO Mortgage QC Trends Report. The latest report is for the third quarter of 2017, which relays loan quality findings for mortgages reviewed by ACES Audit Technology between July 1, 2017 and September 30, 2017.

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The report’s noteworthy findings include:

>>The Q3 2017 critical defect rate declined 6 percent from the previous quarter, revealing the first decrease in this rate for 2017

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>>The percentage of purchase transactions declined in Q3 2017

>>Purchase transactions and FHA loans accounted for a disproportionately higher number of critical defects in Q3 2017

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“As the percentage of refis increased in the third quarter of 2017, we saw a drop in critical defect rates. That said, purchases still comprise the majority of mortgages originated, so critical defect activity still aligns with what you’d see in a purchase-driven market,” said Phil McCall, president of ARMCO. “Lenders need to be mindful of the risks inherent with purchase transactions and take precautions, regardless of fluctuations in purchase/refi market share.”
 
The ARMCO Mortgage QC Industry Trends Report is based on nationwide post-closing quality control loan data from just under 100,000 loans selected for random full-file reviews, as was captured by the company’s ACES Analytics benchmarking software. Defects listed in the report are categorized using the Fannie Mae loan defect taxonomy.
 
Each ARMCO Mortgage QC Industry Trends report includes easy-to-read charts and graphs, a summary that outlines ARMCO’s overall findings, a breakdown of defect rates for each Fannie Mae loan defect category, and a short conclusion. The current and previous reports also contain an analysis of the top credit-related critical defects, which is now a regular feature of the report. ARMCO issues a one-year analysis for the calendar year with each fourth quarter Mortgage QC Industry Trends Report.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

United Wholesale Mortgage Brings On New Chief Strategy Officer

United Wholesale Mortgage (UWM) has hired Alex Elezaj as its Chief Strategy Officer. Elezaj most recently served as Chief Executive Officer of Troy, Michigan-based Class Appraisal, a nationally recognized leader in residential real estate appraisal management.

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“We are thrilled to have such an amazing leader join our team, and his main focus will be aligned with UWM’s which is to help our mortgage broker partners grow,” said Mat Ishbia, President and CEO of United Wholesale Mortgage. “He is in total lockstep with our company from a leadership vision and culture standpoint, as he believes mortgage brokers are the best place for loan originators to work and for borrowers to get a mortgage.”

Under Elezaj’s three-year tenure as CEO of Class Appraisal, the company more than tripled its annual revenue and built strategic business partnerships with more than 300 mortgage lenders and over a thousand of the nation’s top-performing appraisers.

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“What UWM has done over the last several years, growing at such an impressive rate despite market declines and entrenching itself as the run-away best wholesale lender in the country, is insanely impressive,” Elezaj said. “You can see UWM’s momentum and still-massive growth potential everywhere you look. I am excited to join such a great group of people and industry powerhouse, and play a role in its continued efforts to grow the mortgage broker channel.”

Elezaj has received several industry awards, including distinction as one of National Mortgage Professional’s “40 Under 40” honorees, Mortgage Professional America’s “Hot 100” selection, and a 2017 Vanguard award winner by HousingWire.

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UWM has separated itself from other wholesale lenders recently, finishing as the No. 1 wholesale lender in America for the past three years in a row. In 2017, UWM grew its loan volume by 29%, outpacing every other retail and wholesale lender in the country. Through the first quarter of 2018, UWM continued trending upward, increasing production by 85% while the industry overall declined by 10%.

The company has long been recognized as the premier advocate for pro-broker initiatives, and has led the charge to nationally tout mortgage brokers as the best option for consumers.

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.

Guaranteed Rate Rolls Out New Marketing Platform

Guaranteed Rate, one of the largest retail mortgage lenders in the United States, has chosen Total Expert as its strategic technology partner to deploy its new proprietary marketing operating system (MOS), named Red Arrow Connect.  The system is designed for the modern top producer, bringing together best-in-class marketing tools and existing industry leading technology, custom built by Guaranteed Rate’s in-house technology team.

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“As part of Guaranteed Rate’s commitment to leading the industry in innovation, we selected Total Expert as a partner who most closely aligns with our needs and vision for the future,” said Chief Operating Officer Nikolaos Athanasiou of Guaranteed Rate. “Total Expert demonstrated its ability to scale to our needs, allowing us to customize our existing best-in-class technology platform. This streamlines the process for our loan officers to make it easier to build their brand and generate more business.”

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Total Expert, the first modern enterprise sales and marketing technology platform built to meet the unique needs of mortgage lenders, banks and financial institutions, will empower Guaranteed Rate’s nearly 1,500 loan officers across the country to manage and communicate with their customers and referral partners, while maintaining company brand standards and regulatory requirements.

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“Guaranteed Rate has been recognized by numerous publications for being a leader in technology, which demonstrates the company’s ability to be agile and innovative – two words we use to describe Total Expert. We’re pleased that our shared vision has translated into a strong partnership,” said Joe Welu, founder and CEO of Total Expert.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

RoundPoint And Matic Join Forces To Make Homeowner’s Insurance A Snap For Homebuyers

Matic, a digital insurance agency whose technology enables borrowers to purchase homeowner’s insurance during the mortgage transaction, today announced a wide-ranging integration with RoundPoint Mortgage Servicing Corporation (RoundPoint), a mortgage loan originator and one of the nation’s largest non-bank mortgage servicing companies. The integration will make Matic’s one-click “get quote” button available to both customers and employees of RoundPoint.

RoundPoint services over $75 billion worth of mortgage assets as a fully licensed subservicer for commercial banks, credit unions, mortgage companies and hedge funds.

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Now, homeowners whose mortgages are serviced by RoundPoint will be notified by Matic when they could save money by switching to a different A-rated homeowner’s insurance carrier. Homeowners will also be alerted if there’s an opportunity to get more coverage without an increase in premium.

“Mortgage servicers rarely get to call their customers and offer a lower escrow payment or more comprehensive insurance coverage without a premium increase — yet these are exactly the kinds of opportunities Matic will bring to RoundPoint customers every day,” said Matic COO Benjamin Madick.

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RoundPoint will also make Matic available to homebuyers applying for a mortgage loan through the company’s retail mortgage lending division. In addition, Matic will be available to RoundPoint employees via a private-labeled web portal.

“The fact that RoundPoint is making Matic available not only to our mortgage origination and servicing customers, but also to our employees, is a testament to our enthusiasm for Matic’s innovative homeowner’s insurance experience,” said RoundPoint CEO Kevin Brungardt.

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“Matic is a key component of our Homeownership Marketplace initiative, which provides products and services that provide value, save money and enhance the overall experience for borrowers,” added Brungardt. “Our long-term goal is for every customer to custom-tailor his or her own Personal Household Economy™ within this Marketplace. The timing is perfect as we just officially launched this effort with an overhaul of our website, customer portals and overall customer experience.”

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Differentiate Yourself Within Competitive Construction Lending

Construction lending is a growing sector of the mortgage industry, and one that has traditionally been dominated by big banks. Recently however, these big banks are taking a more conservative approach on construction loans, creating opportunities for smaller, community-focused banks to seize the steady flow of capital.

While big banks are choosing to limit exposure by focusing more on existing customers, other financial institutions can jump in to fill the void. Of course, this means that the competition between small and mid-level banks focused on construction lending is reaching an all-time high.

So, how can a financial institution differentiate itself in such a competitive market? The answer is by offering solutions that automate the entire construction loan process, making life easier for all parties involved.

The first part of the construction lending process that must be automated is the post-close administration of construction loans. Innovative lenders are now offering technology that is accessible from any phone, tablet or computer, eliminating the need for paper files and spreadsheets. This allows the borrower to check on the status from any device and improves the experience for everyone. People are making better business decisions enabled by real-time text messages showing draw availability and areas of risk.

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Ideally, the best solutions for this process reduce loan administration time by 50 percent or more, lower inspection costs, identify and mitigate potential risks and enhance working relationships through mobile access. But what about the other side of the construction loan process? While lenders and borrowers are being offered innovative technology to help automate their business, contractors are often left behind.

For instance, the majority of builders and general contractors are still paying their contractors via paper checks, after collecting paper invoices and paper lien waivers. The contractor must then drive to pick up the check, deposit it and wait for funds availability. In addition, builders and general contractors are completing 1099 tax forms and other important reporting material by hand, which can be difficult and time-consuming.

To truly remain competitive in the construction lending market, lenders must not only use technology to automate the post-close administration of loans, but also understand that the entire payment process must be automated in order to be most effective.

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Competitive lenders are typically the community-focused banks that have implemented new technology to complement the automation tools they are already using. This new solution looks like a mobile and web-based service that automates the construction payment stream with electronic submittal of lien waivers and invoices from contractors to the builder, as well as electronic payments to replace checks.

In short, borrowers are able to pay their contractors instantly, allowing them to focus on the project at hand and saving the contractors significant amounts of time and frustration. Borrowers are always going to choose to work with lenders with a more efficient payment process so that they can concentrate solely on ensuring the job is completed properly.

Technology such as this also increases transparency in the payment stream process and reduces unnecessary friction between borrowers, builders and contractors. With mobile access, it is easy to log into the system on-the-go to check for any errors and assess the status of the project. Contractors have all of their payment questions answered simply by checking their phone.

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While this kind of automation is new to the industry, two forward-thinking lenders have already adopted it and have collectively processed over 126 million in construction payments in just four months. As a lender in the construction loan industry, it is critical to automate both the post-close administration of construction loans as well as the payment stream. This ensures the lender faster cycle times and payments, improved communication and of course, a competitive advantage.

About The Author

Matt Johnner

Matt Johnner is president and co-founder of BankLabs, a national provider of community-oriented technologies that reimagine banking to generate new fee income, attract deposits, expand loan opportunities and differentiate the financial institution from competitors. BankLabs believes that community banking is a way of doing business, not a size or location. For more information, visit www.banklabs.com.

Title: Technology For All, No Really

Amazon opens a grocery store where you do not need to check out. Banks let you transfer money to your friends via your cell phone. You use an app to track everything from your health, to your child’s grades, to the news from around the world. Yet, in the tax service business, we still use fax machines.

So, why hasn’t the tax service industry kept pace with technological development? It’s a simple question with a multitude of complex answers. The foremost reason is the sheer variation from collecting agency to collecting agency across the country. Variations on how the data is consumed play a role as well. Add to that the fact that property tax collection, generally governed by state law, must work within the framework of lending laws, where federal legislation and oversight play a key role.

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In states such as Pennsylvania and New York where taxes are collected at the local level, lack of standardized data collection practices is a big hurdle. Smaller collectors prefer doing things the old-fashioned way with paper bills, single checks for each payment and often fulfilling requests for information through phone contact and yes, sometimes a facsimile. The requirements for how tax information must be requested vary by method, frequency, authorization, timing and cost. For some agencies, when the request for tax payment is scheduled, the data is provided either through an automated email or tax roll at no charge, and the process can be completely automated through file exchange. In other jurisdictions, a requester is only able to supply a list of properties they service as opposed to receiving a full file of the tax roll. Having access to the full tax roll permits the tax service provider to provide data to clients on properties added throughout the tax cycle. Some of these requirements vary due to local practices and some are governed by state or local statute.

The requester only has access to the specific parcels the company intends to pay as opposed to receiving a full file of the tax roll. Some of these requirements vary due to local practices and some are governed by state or local statute.

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The availability of tax billing data via file exchange for the procurement of property tax data needed for payment continues to increase across the country. The cost of data storage, at one time a major barrier for agencies and tax service providers, has decreased at a rapid rate. This builds the foundation for the further use of automation to disseminate tax payment information.

As more and more collecting agencies open their files, industry players must use technology with the ability to receive data in a multitude of formats. That data needs to be stored and be accessible in order to customize output as needed to meet lender requirements satisfying their processes for compliant payment and remittance.

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Despite all the variations, there are new ways to maximize the use of automation to reduce errors and improve availability. First, it is necessary to build the foundation to automate the steps traditionally used by tax service providers to report tax information. Technology available today can mimic those steps once the data is available to remove the elements of manual data entry and the accompanying delivery of reporting. The implementation of optical character recognition technology may help convert the information that is still received by paper to electronic data.

The second and perhaps more challenging step is increasing the availability of data from the agencies. The industry must step up ways to address the remaining agencies that operate using 20th century practices. Some strategies that should be aggressively pursued include: 1.) lobbying more to remove legislative barriers to providing data to service providers, 2.) increasing direct partnerships with the collecting agencies to find solutions toward automation that benefit the collector and the payer, and 3.) establishing strategic alliances with data providers that service the collecting agencies. By building alliances with third-party providers that already have access to the data, the tax service industry can increase electronic data availability without burden to the collectors. Taking these steps may someday help the industry bid adieu to that dusty old fax machine.

About The Author

Jim McGurer

Jim McGurer is a first vice president at LERETA, LLC and is responsible for general oversight on data acquisition and property Search operations. McGurer has 25 years of experience in the mortgage servicing/tax servicing industries.

A Time To Listen

Many times we think we have all the answers, or at least that we know what we’re doing. However, it always helps to get some outside advice. In the article “The Power of an Outside Voice” by Jon Gordon, he shares a story about an interaction that he had with a top CEO.

The CEO said, “We brought you here to reinforce our message. Our folks get tired of hearing us say it but when it comes from an outside voice it’s new, fresh and exciting.”

Jon knew exactly what that CEO was talking about.

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Even though he is brought in to speak to some of the biggest names in sports and business his kids have little interest in hearing what he has to say.

Besides having his kids read his books and writing inspirational messages on whiteboards in their rooms, Jon resorted to outside voices to reinforce the message and principles he want to share with them.

Jon has found coaches, tutors, mentors, experts, etc. to encourage, coach, teach, push and bring out the best in his children.

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Jon also give his children books to read and shared inspiring YouTube videos and messages from role models such as Mo Isom, Daniel Rodriguez, Erwin McManus, Alexis Jones, Eric Thomas, Bailey Obrien and other inspirational people.

There’s something about the power of an outside voice and I want to encourage you to use outside voices to share and reinforce important principles and messages with your team at work and at home.

I will do all I can do to support you by continuing to write articles, give talks and provide even more free resources to be an outside voice for you and others. I know it’s my purpose and I’m glad to be of help.

NexLevel Advisors is a strategic business advisory firm that assists companies in growing their businesses more quickly and strategically than they could by themselves. We are passionate about taking your business and people to the next level by differentiating your company and its unique offerings.

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Our customized solutions help you to sell more, more frequently, to more people by clearly establishing your specific value propositions. This is where real world experience, strategy and execution deliver measurable results for your organization.

In the end, there are many outside voices out there and I encourage you to find the right people and resources to share with your work team and ask family members, neighbors, friends, teachers and mentors to encourage and teach your children and team at home. This philosophy is so great that it will help you with your work life and your home life.

There’s the power of an outside voice and you can start tapping into one today!

About The Author

Michael Hammond

Michael Hammond is chief strategy officer at PROGRESS in Lending Association and is the founder and president of NexLevel Advisors. They provide solutions in business development, strategic selling, marketing, public relations and social media. He has close to two decades of leadership, management, marketing, sales and technical product experience. Michael held prior executive positions such as CEO, CMO, VP of Business Strategy, Director of Sales and Marketing and Director of Marketing for a number of leading companies. He is also only one of about 60 individuals to earn the Certified Mortgage Technologist (CMT) designation. Michael can be contacted via e-mail at mhammond@nexleveladvisors.com.

Most Home Prices Are Now Above Pre-Recession Peaks

Data from ATTOM Data Solutions shows that median home prices in 57 of 105 metropolitan statistical areas analyzed in the report (54 percent) were above their pre-recession home price peaks in the first quarter.

Nationwide the median home price of $240,000 in Q1 2018 was less than 1 percent below its pre-recession peak of $241,500 in Q3 2005, but still up 9.1 percent from a year ago. Metro areas with Q1 2018 median home prices the furthest above their pre-recession peaks were Houston, Texas (69 percent above); Dallas-Fort Worth, Texas (67 percent above); Denver, Colorado (62 percent above); San Jose, California (60 percent above); and San Antonio, Texas (57 percent above).

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Other major metros with at least 1 million people and with Q1 2018 median home prices at least 30 percent above pre-recession peaks were Nashville, Tennessee (46 percent above); Austin, Texas (45 percent above); Salt Lake City, Utah (42 percent above); Raleigh, North Carolina (35 percent above); Indianapolis, Indiana (31 percent above); and Oklahoma City, Oklahoma (30 percent above).

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“Rising interest rates and recently enacted tax reform that removed some tax incentives for homeownership were not enough to cool off red-hot home price appreciation in many parts of the country, with 30 of the 105 local markets analyzed posting double-digit gains in median home prices in the first quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Home prices are still below pre-recession peaks in 46 percent of local markets, but nearly one-third of even those markets posted double-digit home price appreciation in the first quarter.”

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Median home prices in 48 of the 105 metro areas analyzed in the report (46 percent) were still below pre-recession peaks in Q1 2018, led by Bridgeport-Stamford-Norwalk, Connecticut (25 percent below); New Haven, Connecticut (22 percent below); Allentown, Pennsylvania (21 percent below); Philadelphia, Pennsylvania (20 percent below); and Hartford, Connecticut (19 percent below).

Along with Philadelphia and Hartford, other major metros with at least 1 million people and with Q1 2018 median home prices at least 15 percent below pre-recession peaks were Chicago, Illinois (19 percent below); Baltimore, Maryland (17 percent below); Tucson, Arizona (16 percent below); Las Vegas, Nevada (16 percent below); and New York-Newark-Jersey City (15 percent below).

How Digital Can Drive Down Costs

In this era where smartphone and tablet usage permeates nearly all of life, it only seems logical that the purchase of a home would eventually move in the digital direction as well. This certainly creates a situation where the loan package can be digitally moved with minimal cost rather than printed (multiple times, most likely) and physically moved between geographies. Therefore, processing delays associated with in-transit time and cost can be reduced, improving the overall process for both lender and borrower.

However, while borrowers may be able to upload copies of their paystubs and bank statements for example, the data must still be gleaned from those documents as part of the underwriting process. Without the aid of sophisticated OCR, that gleaning process remains a manual process, even though the mortgage is “digital”.

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With the costs to process each mortgage continuing to rise, lenders must leverage automation to improve profitability and consistency in their business processes. With advanced mortgage OCR solutions, mortgage companies will reduce their level of manual document indexing and data entry activity, enabling them to process more loans per day at a lower cost per loan – yielding a leaner process and increased profit margins.

Paradatec’s Advanced Mortgage OCR solution does more than just convert document images to text. Once converted, that text is then processed by our artificial intelligence (“AI”) rules engine in the same way a human being would process the content. Based on these rules, documents are automatically indexed and relevant data points are extracted. This information is then passed to downstream applications for appropriate routing, decisioning, and archival.

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Our process begins with a full-page OCR scan of each image, typically completed in less than one second per page. This high-speed performance allows every word on the page to be included in the scope of the AI rules engine analysis, just as a human being would interpret the content. This content evaluation process is unique to Paradatec in terms of the combination of speed and ability to include all page content in the evaluation scope, thereby making it extremely flexible with documents of varying layout (for example, bank statements).

Other OCR solutions typically expect relevant data points to consistently appear in the same locations (or ‘zones’) on a document. If the data shifts due to changes in layout (again, think of bank statements), the zone-based approach will fail unless another layout template is created, making for a greater administrative burden with these solutions.

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A high volume, scalable OCR automation initiative requires the flexibility of Paradatec’s Advanced Mortgage OCR solution to process an unlimited number of document layouts without needing to develop specific templates for each layout variation. This capability is unique to Paradatec and a vital feature for creating an effective unstructured document classification and data capture solution.

Applying the right technology in the digital lending world can drive down cost providing lenders with a significant competitive advantage.

About The Author

Mark Tinkham

Mark Tinkham is Director of Business Alliances at Paradatec, Inc. Over the past twenty-five plus years, Mark has worked for technology companies that deliver innovative solutions to the financial services industry. For the past ten years, his primary focus has been bringing efficiencies to the mortgage market through industry leading Optical Character Recognition (OCR).