How Do We Change The Mortgage Process For The Better?

A lot has been made of complying with this rule or that rule, but in the rush to comply I think the big picture is sometimes lost. The big picture should include changing the whole mortgage process for the better instead of just trying to stay ahead of this rule or that regulator.

So, how do you do that? “We focus on the backend processes,” answered David Sohm, COO at Capsilon. “We want to speed that up and keep the communication open. Things change all the time. The most recent change was TRID. TRID was supposed to speed up the process and make the process easier to understand, but it has actually extended the process.”

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Capsilon is provider of cloud-based document management solutions for mortgage lenders and investors. Sohm is responsible for managing the company’s growth plans and overseeing alliances and corporate development.

Sohm has more than 15 years of successful president/chief operating officer experience in software and Software-as-a-Service (SaaS) markets, in both public and private companies. He has been directly responsible for the evaluation, selection and integration of multiple acquisitions and mergers (both buy and sell). He has developed and executed worldwide product support, sales, distributor and marketing plans to achieve company growth and profit goals.

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“In the end, if the number of touches can be reduced, that speeds things up. For example, knowing which documents are required and which docs are missing is important. Also, there needs to be a secure place to exchange information so you’re not just exchanging important info through the air,” noted Sohm.

A lot of the heavy lifting required to change the process for the better is done by the LOS because it’s the system of record. So, what contributions are LOS vendors making to improve the space? “There are a lot of ways that people are trying to simplify the process, but beyond that you also have to engage at the right times,” answered Abhinav Asthana, a senior product manager and global head of mortgage consulting at Wipro Gallagher Solutions (WGS), a Wipro Ltd. Company, which is a provider of end-to-end technology products and services for mortgage, consumer, and commercial lenders in the United States and abroad. WGS’ technology products include its flagship NetOxygen Loan Origination Systems (LOS) and mobile lending technologies.

“We at WGS are manufacturing a loan for the borrower so the customer has all the input. So, the touch points should be more skewed toward the borrowers vs. the backend of the process. Today when a borrower starts an application, the loan officer is in constant communication with the borrower, asking for more and more items. While the LO is working the loan, or when the loan is being worked by the underwriter, the borrower is in the dark. The borrower doesn’t know what’s going on. The back office is working the loan, but the borrower doesn’t know what’s going on. You need to inform the borrower upfront and let them know what’s going on and what comes next.”

As vendors talk about advancement and what they are doing to propel mortgage lending into this century, the rubber really hits the road with the lender. If the lender doesn’t adopt new technologies, nothing changes.

“I got in the mortgage industry in 2003 and there was a lot of talk about e-mortgages,” remembered Dan Jones, vice president, technology at Churchill Mortgage Corporation. “Look at where we are today. The industry moves slow. Also there was a lot of talk about younger borrowers wanting everything electronic, but we are finding that they also want to speak to you on the phone.”

Jones has been with Churchill since July of 2003 and has previously worked as a small business technology consultant, Systems Analyst for a national manufacturing company and Data Specialist for an international computer manufacturer. Jones’ experience in customizing and installing Churchill’s multi-branch loan origination platform and integrating their pricing engine, lead management, database marketing, imaging workflow and e-commerce efforts has provided a unique holistic perspective and hands on knowledge of every aspect of the mortgage banking process. In these efforts, he helped spearhead an LOS implementation during Churchill’s transition from Broker to Correspondent Lending in 2003, and played a key role in Churchill’s implementation of a newer LOS.

“If you have to boil the mortgage process down, you have to automate the experience,” Jones pointed out. “Its not just about how you interact with the borrower, it’s about total transparency. Getting a mortgage can be an intimidating process that consumers don’t understand. Going forward we at Churchill are working on automating the collection of information so the need for the borrower to provide and share documents like bank statements, W2s, etc. goes away. The need to traffic in these documents is going away. As this becomes electronic it will streamline the whole process. That’s where every lender should be going.”

About The Author

What Does It Take To Be A Licensed Appraiser?

I am extremely privileged to be part of two professions. As a true aviator for the past 25 years, I first took flight at 16. While I love to fly, I decided to pursue a second wonderful and fulfilling career as a Certified Residential Appraiser almost 13 years ago. I am currently a Lead Quality Control Review Appraiser with AXIS Appraisal Management Solutions and the Chair of the USGBC, United States Residential Green Building Committee.

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Both of my industries, aviation and residential property appraisal, have expressly stated their eligibility requirements for professionals to pursue each career. Allow me to provide you a critical assessment as to the differences and challenges of being a Certified Residential Appraiser compared to becoming a Commercial Airline Pilot. This comparison chart lays out the main requirements of each profession:

TME616-Your Voice Chart

For appraisers, the set of application procedures provide applicants quite a tedious challenge. Bearing in mind that a Certified Residential Appraiser’s work is to mainly perform residential real property appraisals, the requirements seem to be disproportionate when compared to obtaining an Airline Transport Pilots License (ATPL).

It is crucial to note that there is a great disparity in terms of the requirements in the application for an ATPL considering the fact that every pilot is burdened with a vital responsibility not only in keeping the aircraft in good condition; but more importantly, in ensuring the safety and security of the passengers of the aircraft.

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Having been exposed both in the field of commercial aviation and residential appraising, as a pilot who has been in command of a 100 million dollar aircraft with 180+ souls on board and as a current certified residential appraiser who can perform a valuation on a property that can be as low as $5000, the disparity between the eligibility requirements seems to be excessive.

While I am fully aware of the duties and responsibilities of a Certified Residential Appraiser, I highly regard that the application procedure and eligibility requirements that are being set are excessive. To this effect, excessive regulation on their qualification criteria, it is claimed, limits the ability of the appraisal industry to hire and entice competent individuals as they are easily discouraged by the requirements.

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Inspiration Leads To Action

Summer is in the air; it’s the time of the year when many people make the leap to homeownership. Combine this with the fact that rates are still sitting at comfortable lows, and you can see that it is now more important than ever to inspire potential borrowers to reach out to you for their home buying needs. However, it is equally important to make sure your current borrowers get their next mortgage through you. Similar, yet distinct, approaches should be taken with each group.

We recently held our annual user conference, which draws hundreds of the industry’s premiere lenders and technology providers together to talk about all things mortgage. I have participated in this conference for many years, listening to our myriad of speakers and networking with our customers and partners. The conference always reenergizes participants and sparks new ideas.

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This year, I honed in on one message in particular: Now, more than ever, lenders want to get borrowers excited about homeownership. This sounds obvious; after all, lenders are always seeking to attract borrowers. Marketing lays the groundwork, sales makes the pitch, and operations manufactures the loans. Together, they close deals.

So where does this process go awry, and why are lenders seeking to get borrowers excited? To put it simply, borrowers are not interested in the lender’s sales pitch.

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The stark truth is that the vast majority of current mortgage holders will take out their next mortgage from a new lender. There are lots of reasons for that, including referrals from friends or real estate agents, or the pull of timely advertising. Brand loyalty is rare in housing finance, in part because lenders have little interaction with borrowers once their loan closes.

With the shift to a purchase market — one ripe for the biggest crop of first-time buyers in history — keeping in touch with your current borrowers throughout the life of their loan lays the foundation for increased brand-loyalty. There are many ways to approach relationship-building. Surveys can give you great insight into your current standing with customers, but you must then act on those responses. Borrowers (especially those who are unhappy or indifferent) must know that their voice has been heard. It also helps to stay in front of them with your current rates and programs; you want to be top of mind when the time comes for them to buy their next home.

Reaching those who are not already customers takes inspiration and differentiation. Lenders should experiment with new approaches to advertising, different types of conversations with potential customers, and new ways to cultivate and motivate referrals. The idea is to stand out in a crowded market with a combination of value and service that leads the prospective customer to action.

It’s never dull in our industry. Inspiring current borrowers and attracting new ones is more important today than ever before. Market research methods let us know who is likely to be looking for homes and financing. Other technologies — like online tools lenders make available to borrowers and potential borrowers — can also help. These are all great steps in the right direction, yet, as mentioned, today’s borrowers are often not brand-loyal. Address this by building loyalty with your current customers and by inspiring potential customers. After all, inspiration often leads to action. These are key ingredients in the recipe for continued success.

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The CFPB Has To Listen As Well

There is a lot of pressure on the industry to adhere to the policies of the CFPB. But what happens when those policies aren’t clear? Guess what, in this case, the CFPB should listen to the industry. For example, The Association of Mortgage Professionals has called upon both the Consumer Financial Protection Bureau (CFPB) and Federal Housing Finance Agency (FHFA) to further clarify the “Know Before You Owe” real estate disclosure forms. NAMB is asking the CFPB and FHFA to include a new line item that clearly states the guaranteed-fees (G-fees) from Fannie Mae and Freddie Mac and Loan Level Price Adjustments (LLPAs). NAMB is seeking further transparency in the mortgage process as both the G-fees and LLPAs are currently incorporated into underlying rates paid by borrowers at the closing table.

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“NAMB supports the removal of LLPAs going forward because of the increase in mortgage credit quality and improved industry risk management practices,” said NAMB President Rocke Andrews, CMC, CRMS in the letter. “We ask the agencies to go a step further and require disclosure of these fees to consumers. In the alternative, provide mortgage market participants a regulatory safe harbor framework to voluntarily disclose these fees to consumers.”

In a letter dated April 28, 2016, CFPB Director Richard Cordray acknowledged complaints and concerns relating to its “Know Before You Owe” rule, also known as the TILA-RESPA Integrated Disclosure (TRID) rule, and stated its plans to seek input from industry trade groups on making updates to this federal policy.

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“The CFPB should use this opportunity to disclose to the consumer the hidden tax G-fees represent,” said Andrews. “Such disclosure will help consumers understand, in certain cases, why their rate is higher than normal and help consumers make better decisions. Consumers deserve to know that a portion of the cost of financing a new home will be used to finance federal spending not directly related to homeownership.”

The CFPB has targeted a July 2016 release for the revised “Know Before You Owe” disclosure.

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Why Tear Down That Wall?

Ronald Reagan knew that tearing down walls Trumped building them. Presidents Ronald Reagan and Bill Clinton were both widely known as master communicators. Their extraordinary communication skills were a key element that made them wildly popular and successful as presidents. During this highly partisan, crazy political season, much can be learned about how to improve the way we do business in the mortgage industry by studying either of these former presidents.

Regan was dubbed The Great Communicator. “What made him the Great Communicator was Ronald Reagan’s determination and ability to educate his audience, to bring his ideas to life by using illustrations and word pictures to make his arguments vivid to the mind’s eye,” opined Ken Khachigian, former Reagan speechwriter.

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Clinton was known as the Explainer in Chief. Media analyst and syndicated columnist Steve Adubato, Ph.D., makes the case that Clinton used two key techniques that contributed to his success as Explainer in Chief. Clinton used the terms “we” and “us” more than “I” when explaining even the most complex geopolitical or economic issues to the electorate. And he employed liberal use of the Q&A approach. Adubato points out, “The former president consistently asked ‘why?’ something was the case and then quickly and confidently answered that question. For example, Clinton asked; ‘Now why is this true? Why does cooperation work better than constant conflict? Because nobody’s right all the time, and a broken clock is right twice a day.’”

What Builds Walls

It’s not a question, and it’s not “who” builds walls, but “what” builds walls. In the mortgage industry, we tend to undertrain and under-explain. We tend to state the “whats” without the “whys” and inadvertently build walls. Let’s use a simple loan origination example to understand this point. When an underwriter provides an approval condition on a loan, he or she typically states what is needed. The processor and the loan originator scurry about to meet the underwriter’s demand and often become extraordinarily frustrated when the underwriter then asks for more information or rejects what is provided as inadequate. The reason often lies in an underlying lack of understanding of why the item was needed by the underwriter. This lack of full communication and understanding the why behind the request leads to additional cycle time for the loan file, additional labor expense for unnecessary back and forth and general inefficiencies. Perhaps more important, simply stating “what” without “why” is an insidious separator that builds walls between colleagues and erodes the culture of companies and our industry overall.

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Why Educates and Motivates

It has been my long-held belief that we should train everyone to have (and everyone should have a keen interest in having) a working knowledge of performing the role at least two steps beyond theirs in order to fully understand and be effective in their own role. To extend the example, if the processor and loan originator have a full understanding of not only the underwriting guidelines that prompted the underwriter’s condition, but also of the secondary market’s risk factor experiences that prompted the guideline to begin with, the condition likely would have been fully resolved far more easily and efficiently. Ultimately, the borrower would have been hassled less, the processor and loan originator would have been more productive and the underwriter’s relationship with the production staff would have been stronger. The wall never would have been built had the why been adequately understood with what.

In Regan’s famous 1987 Berlin speech he did not simply say, “Mr. Gorbachev, tear down this wall!” In a mere 2,600 words, he made his demand, provided historical context of the building of the Berlin wall and then explained not only how, but why it had failed to achieve its purpose. Then he invited his foes to join him to work together. Toward the end of the speech, he focused on the unity that could be achieved in tearing down the wall by saying, “and I invite Mr. Gorbachev: Let us work to bring the Eastern and Western parts of the city closer together, so that all the inhabitants of all Berlin can enjoy the benefits that come with life in one of the great cities of the world.”

We all know that the Berlin Wall fell, the cold war thawed and the European Union was eventually formed where the wall formerly stood. It did not happen simply because of the demand to tear down the wall. It happened because of the persuasive context of why. What can you do in your organization to improve efficiencies and cohesiveness using the techniques of the Great Communicator and Explainer in Chief? Consider requiring everyone to explain why each time they state what. Imagine the power and benefits why can offer your organization if consistently used.

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Here’s How To Create Content To Market Your Company:

Creating content for a brand-new company or product can be challenging at times. The following infographic by CopyPress can make the process easier by guiding you through five crucial steps of planning and creating content.

The first step is to get to know your subject. What does the company do or sell? Why? What concepts does the company have for the content?

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“Identify the passion fueling their work, so you know what messages and values to express,” suggests the infographic. “Identify the buzzwords related to their industry, so you know what topics to discuss.”

The second step is to identify the company’s goal for the content. Does the company want to attract attention, educate, encourage an action, and/or generate traffic?

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To find out more about the next steps in content creation and what content to create, tap or click on the infographic.


Ask Yourself: What Makes You Stand Out?

Every financial services provider these days is “best in class” and every new offering is “leading edge.” Some vendors think they have to hit on these phrases in order to succeed, but success will really come when you can define how you’re different and unique.

In an article entitle “4 Ways to Stand Out and Grow Your Business” written by Jon Gordon, he shares 4 tips of how to stand out in the crowd. Here they are:

Create a Great Culture – Whether you are a Fortune 500 company or five-person company it’s never too early to decide the kind of culture you want to create and determine what your culture stands for. For example, even when Apple was just a two-person company consisting of the two Steves it was clear their company culture challenged the status quo and as they grew they attracted and hired those that fit their culture. While it’s difficult to quantify the benefits of a strong culture, we can all agree that there is something about culture that speaks volumes to the marketplace. When you focus on your culture you create a strong foundation of values, beliefs, expectations and habits that cause you to stand out in the marketplace and ultimately grow your business.

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Lead with Optimism – Now, more than ever, optimism is a competitive advantage. Bob Iger, the CEO of Disney, was asked the most important characteristic of a leader and he said “Optimism.” After all, it’s not the pessimists who will grow this economy. It’s the optimists who believe in a brighter future that will take the actions necessary to create it. Optimism will also help you navigate the setbacks, challenges, naysayers and Energy Vampires as you seek to grow your business. You have a choice. You can believe success is impossible or you can believe that with faith, hard work and an optimistic attitude all things are possible. To grow your business, choose the latter.

Show your Customers you Care – I am convinced that the most successful companies find unique ways to show their customers they care about them. Les Schwab Tire Center employees run outside to greet their customers when they pull up in their cars. Zappos offers free shipping and free return shipping. My local cleaner replaces buttons on my suit if they notice they are missing and provides free pick-up and delivery service. Rosenblums, the place where I buy a lot of my clothes, sends a gift certificate on my birthday. I can’t tell you how you should stand out without knowing more about your business but I can tell you, if you want to stand out and grow you must create your own signature way to show your customers that you care about them. When you show your customers you care they will talk about you to everyone (even write about you) and you’ll stand out in a crowded and competitive marketplace.

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Pursue Excellence – They can blame the economy, the market and the competition all they want but these are not the reasons people and businesses are unsuccessful. These factors merely expose those with weak business models, bad cultures, poor leadership, toxic work environments, apathetic sales forces and mediocre products and services. On the contrary those who pursue excellence are thriving. From the carpenter who is in demand because everyone knows he’s on time, works hard and always satisfies the customer to the graphic designer who strives to make each project her masterpiece, to the realtor who is passionate about helping her customers find the right home, to Apple iPads and iPhones, to restaurants that are jam packed… it’s clear that those who passionately pursue excellence will stand out and grow high above the competition. The economy no longer will support mediocrity but if you can find your niche, share your passion and work hard to be great then growth will be inevitable.

Now use these strategies to prove that you’re the best technology company around today.

About The Author

Closing Problems Lenders Can’t Control

It has been nine months since the TRID disclosure requirements were activated. During that time period the industry has had the opportunity to resolve issues such as the potential for delays in loan closings, problems with accuracy of the disclosures and the corresponding ramifications. Recently issues emanated from the secondary market concerning the potential of assignee liability for secondary market investors.

While all of these issues are generating numerous news articles and commentaries denigrating the requirements, forcing lenders to delay closings and increasing the overall costs of originating a loan, it has also exposed the fact that our partners in this process are less than knowledgeable, and in many cases, downright ignorant of the new disclosure requirements and documents. I had the pleasure, or rather the displeasure of experiencing this over the past several months as my daughter and her husband sold one house and purchased another. We all recognize that these new requirements are intended to provide accurate financial information to the consumers in order to ensure that they “know before they owe”, but is that really happening. Here is just one example of what borrower’s experience.

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My kids sold their then current home with no problem and found a home that they wanted to buy. Their loan officer was very knowledgeable in presenting various mortgage options and provided guidance to them for completing the application and they were able to understand the LE when it arrived. Now here I must admit that my daughter, having lived with a mortgage banker for most of her life, was much more knowledgeable than other borrowers. None the less, they found the LE very easy to understand.

The trouble began when the home inspection occurred and the inspector found a problem in the air conditioning. While this was obviously the sellers’ issue, the seller’s realtor increased the sale price of the property to cover the cost and told the kids that they could pay it with a personnel check at closing. Furthermore, she stated that if they didn’t do it that way, the lender was going to have to reissue the LE and that it would delay closing. Her reason she explained was because lenders had eight years since the mortgage meltdown and still couldn’t follow the new requirements. Of course, that didn’t happen.

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Once the loan was approved and scheduled for closing this same realtor called them directly to “warn” them that they better make sure their buyer had received her closing disclosure and that it was accurate or they would not be able to close on their current home. Meanwhile they had received their CD from their lender and using the amount they would have to pay, had made all the final arrangements. The call about the buyer’s CD created a panic when they were not able to reach their buyer and the buyer’s agent didn’t seem to know anything about a “required closing disclosure”. They finally got this straightened out only to get a call from the closing attorney with their “final figure” which of course did not match the CD. It seems that he had taken it upon himself to charge them for different “inspections” that their lender had not required or included in their fees because they were actually the sellers. After much back and forth discussions with threats from both the realtor and the closing agent, the CD was deemed correct. Confident that everything was now “OK” they proceeded to closing only to find out that the realtor fees were five thousand less than they had been told. So at the end of the day, despite the lender’s requirements to give these borrowers’ the exact amount of their closing costs, the overall amount required at closing was wrong. More importantly, it was wrong not because of the lender but because of realtors and closing attorneys. And here in lies the problem. The fact that these entities are ignorant of TRID requirements, have no regard for what is best for the buyer but are only interested in getting paid, and have no oversight but are free to manipulate buyers and borrowers, negates anything the lender is required to do. While I have been told that the realtor lobby is the strongest one on Capitol Hill it is time to stop harassing lenders and start requiring that these parties bear their responsibility in ensuring that consumers do “know before they owe.”

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