Think About Adding Value

In covering the mortgage space for many years, there are always partnerships to report on. That’s great, but when these companies join forces, I thin they should first think about how this partnership really benefits the lender.

For example, Floify, a mortgage point-of-sale solution, has joined forces with Plaid, the technology platform and data network powering many of the largest and fastest-growing applications and businesses in financial technology. The partnership enables lenders and loan originators to order and receive Plaid’s Asset Reports from the Floify point-of-sale solution, simply by having consumers connect their bank account through Plaid.

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Once integrated with Floify, Plaid can be configured to automatically trigger a request for borrower asset reports upon the conversion of a prospect into a loan file, or manually trigger from an active loan file. After a Plaid request is initiated, borrowers are prompted to select their financial institution and enter their credentials via Plaid’s front-end module. Upon successful login, the borrower’s asset report is securely transmitted and synced to their corresponding loan file, which saves valuable time in the loan origination process.

“Floify is thrilled to partner with Plaid as we continue to use our automation technology to improve the mortgage process for loan originators and borrowers,” said Dave Sims, CEO of Floify. “Our integration with Plaid further simplifies and accelerates loan origination for mortgage professionals who combine the power of Floify point-of-sale system with Plaid’s Day 1 Certainty-approved digital asset verification functionality.”

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Floify simplifies the way lenders collect, verify and manage loan documents; track loan progress; and communicate with borrowers and other loan stakeholders. With Floify, mortgage professionals have reported saving hours in the loan origination process, while increasing the profitability of their lending operation and improving borrower satisfaction.

Floify is a digital mortgage automation and point-of-sale solution that streamlines the loan origination process by providing a secure application, communication, and document portal between lenders, borrowers, referral partners, and other mortgage stakeholders. Lenders use Floify to collect and verify borrower documentation, track loan progress, communicate with borrowers and real estate agents, and close loans faster. Floify is based in Boulder, Colorado. 

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Plaid is the technology platform and data network providing the tools and access needed for the development of a digitally-enabled financial system. Plaid makes it easier and safer for developers—from the smallest startups to the largest financial institutions—to build innovative financial services and applications. Plaid’s infrastructure makes it possible for companies like Robinhood, Acorns, Betterment, Coinbase, Venmo and hundreds more to serve their customers, regardless of where they bank, allowing them more insight and control into their spending, investing, budgeting and their overall financial well-being. Today, one in four Americans with a US bank account use Plaid.

Similarly, Beta Music Group Inc. through its operating subsidiary Get Credit Healthy, Inc., afintech platform that provides independent mortgage originators with credit resources, education, data intelligence and lead recovery has partnered with ARIVE, a platform that offers the first of its kind mortgage marketplace designed to allow independent mortgage originators access to lenders, borrowers, and third-party vendors in a seamless ecosystem.

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Through a partnership with AIME, the Association of Independent Mortgage Experts, ARIVE will provide independent originators with the connections and tools to both compete in a crowded marketplace and serve increasingly tech-savvy borrowers nationwide.  Lenders and third-party providers want to make it easy for their customers, and AIME is over 35,000 strong. 

ARIVE has multi-year contracts with a network of more than 20 wholesale lenders. That includes five of the top ten wholesale lenders in the country: United Wholesale Mortgage (#1), Caliber Home Loans (#2), Stearns Lending (#3), Flagstar Bank (#7) and Home Point Financial (#8). Combined, these lenders make up nearly half of wholesale market share. Top Renovation Lender AFR Wholesale, Reverse Lender Finance of America Mortgage, and Paramount Residential Mortgage Group (PRMG) are among the additional 20 wholesale lenders connecting to ARIVE.

Elizabeth Karwowski, CEO, stated: ” We are extremely excited to partner with ARIVE to deliver one-click access to a host of credit services and solutions to assist the ever growing number of Independent Mortgage Originators on the ARIVE platform.”

Today’s fiercely competitive financial services market challenges originators like never before. Heightened pressure to create new loan opportunities, reduce prospect lead fallout, and provide better pipeline visibility poses a significant burden on independent mortgage originators.

To thrive under these market conditions requires a revolutionary new solution that transforms a currently untapped market into a well-qualified, well-informed applicant pool. Get Credit Healthy converts fallout into funded, helping independent mortgage originators close more loans while providing them with a significant competitive advantage.

ARIVE, LLC., is a private technology company based in Philadelphia, Pennsylvania. Conceived as an engine to drive mortgage technology into the future, ARIVE offers the first of its kind mortgage marketplace designed to allow independent mortgage originators access to lenders, borrowers, and third-party vendors in a seamless ecosystem.

BEMG, through its operating subsidiary Get Credit Healthy, utilizes its proprietary processes, platform, and software to integrate with lenders to make it easier to recapture leads. Developed for and by those with extensive experience in the mortgage industry, Get Credit Healthy’s platform has already facilitated over $200 million in new loan opportunities.

Get Credit Healthy has showed sustained growth over the past three years and shows no signs of slowing down. Get Credit Healthy is working to increase its network of partners and is looking forward to a very promising future.Why do I bring up these partnerships? Because they make sense. Both are trying to help lenders solve real pain points. That’s what good partnership should do. As I continue to report on this industry, that’s what matters most. Doing something positive for lenders that matters is what makes for a good partnership.

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Looking Further At This Year

The Mortgage Bankers Association projects 2018 purchase originations to reach $1.167 trillion, a 7.3 percent increase from 2017. But the MBA forecast also calls for a 28.3 percent drop in refinance originations, to $430 billion. Overall, MBA expects mortgage originations to decrease to $1.597 trillion in 2018, from $1.688 trillion in 2017.

For 2019, MBA forecasts total originations to increase to $1.64 trillion, with purchase originations rising slightly to $1.24 trillion and refinances dropping to $395 billion.

In addition to the updated forward-looking forecast, MBA upwardly revised its estimate of originations for 2016 to $2.05 trillion from $1.89 trillion, to reflect the most recent data reported in the 2016 Home Mortgage Disclosure Act data release.

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MBA Chief Economist Mike Fratantoni said 2018 home purchase originations could increase at nearly double the clip from 2017.

“The housing market has been hamstrung by insufficient supply, with inventories of homes remarkably low, given the home price growth we’ve experienced,” Fratantoni said. “The job market remains strong; demographic trends are quite favorable; mortgage credit is becoming more available to qualified borrowers; and home prices should continue to rise. All the pieces are in place for stronger growth in 2018 and beyond.”

The executives that I spoke to agreed with the MBA outlook. “Based on the MBA forecast there is about a 5% decline overall projected,” said Joe Langner, CEO at Blue Sage. “Based on what we are hearing from our clients that’s right. I’m also hearing that rates may not increase much next year. On the tax side, that may open up spending and liquidity.

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“It’s hard to say about what to expect with new regulation this year,” he continued. “It is unlikely that we will see heavy changes though.”

Langner has more than 25 years of executive experience in the financial services and software industries. A former COO, executive vice president and chief sales officer at Ellie Mae, Langner played a significant role in Ellie Mae’s initial public offering and helped transform Encompass, the company’s loan origination software (LOS), into an industry leader. Most recently, he served as president of PC Lender, a provider of SAAS mortgage lending solutions. Langner’s previous roles include general manager and executive vice president for Sage Inc., a leading, global ERP & CRM provider, and senior vice president at Dun & Bradstreet, where he oversaw the expansion of the company’s brand into the small business market.

Lenders are going to be very keen to buy new technology this year. “There are a few large lenders that are very focused on digital mortgages, like Quicken and Wells Fargo. Robotics will redo repetitive tasks in a digital way,” believes Jim Smith, President of Property Solutions.

“The regulatory environment drives everything we do. The MBA put out a white paper on GSE Reform. With that plan other elements are there that will benefit the industry if implemented this year.”

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Jim’s directive is to provide products and solutions that meet the needs of the customer. Jim also serves as one of Computershare’s U.S. Diversity Champions where he is committed to continuing to build a more diverse workforce throughout the United States.

Prior to joining Computershare, Jim was a senior executive of Clear Capital as well as President of Urban Lending Solutions where he oversaw all areas of the company, including operations, finance, product development, technology, and sales.

“I don’t see any volatility overall,” pointed out Les Parker, SVP, Strategic Business Development, LoanLogics. “Refinances are declining, but overall originations will be stable. Refis are very volatile because its based on rates, but purchases will see a steadily increase.

“What’s even more clear is that the role of technology will expand. Digital mortgages will grind toward larger adoption, but it won’t be fast. Technology will focus on things like HMDA and back office operations.”

LoanLogics was founded 12 years ago to improve the transparency and accuracy of the mortgage process and improve the quality of loans. LoanLogics serves the needs of residential mortgage lenders, servicers, insurers, and investors that want to improve loan quality, performance, and reliability throughout the loan lifecycle. It develops advanced solutions that help clients validate compliance, improve profitability, and manage risk during the manufacture, sale, and servicing of loan assets. Achieving these goals was the motivation in the development of the industry’s first Enterprise Loan Quality and Performance Analytics Platform.

“I agree with the MBA’s outlook,” continued Parker. “There might be some non-QM product this year. There are some initiatives within the MBA to open up safe harbor. There is large investor appetite that might fuel an increase in those types of originations. Refi volume however is definitely on the decline.”

“Our expectations are that refinance volumes should be down since rates are expected to rise,” agreed Gagan Sharma, President and CEO of BSI Financial. “There is an expectation that the Fed will raise rates again in December. As a result, the rate-and-term refi product should be a smaller part of the refinance market. We may see an increase in cash-out refinance since many borrowers who have been in their homes for a while may have significant equity in their homes. In parallel, we may see an increase in non-QM lending as the borrowers who had a negative credit event over the last few years continue to rehabilitate their credit and lenders are more willing to work with them.

“Technology will continue to drive change in the mortgage marketplace,” noted Sharma. “We think of the Rocket Mortgage type of consumer as an experience that consumers will start to expect almost as a baseline, especially for a refinance product. In the purchase market, since the consumer typically needs more handholding and there is a need to work more closely with the Realtor, a different solution will need to be thought of. We have seen lenders build pre-qualification ability within mobile apps. We expect to see continued investment in supporting the purchase transaction.”

Sharma acquired BSI from its former parent in 2006 and transformed the company from a small lender into an innovative and thriving loan servicing provider, growing BSI by over 70 times since his acquisition. Sharma was recently named EY Entrepreneur Of The Year 2017 Award Finalist in the Southwest Region.

Prior to acquiring BSI, Sharma founded a global outsourcing company serving the financial services and technology industries. He raised institutional equity financing and increased its labor force to more than 1,200 people before selling it. Prior to that, Sharma was a consultant with Deloitte, advising clients on matters of strategy and operations in the financial services and high tech industries.

“We do expect non-QM lenders and even the GSEs continue to provide more options for borrowers. They may be in terms of expanded underwriting or low downpayment programs. We believe that a reduction in the rate-and-term refinance opportunity will be an impetus for the industry to focus on this underserved market,” pointed out Sharma.

Taking all things into consideration, the executives that I talked to are very optimistic about all things to come in 2018 and beyond. “As I mentioned, rates will have an impact on the refinance market, with the market likely evolving from a rate-and-term market to a more cash out market. On the other hand, we believe that the purchase market will likely be less sensitive since that is a function of the life situation that a borrower may be in. With the economy continuing to do well, we believe that a 25 or even 50 basis points increase in rates, while impacting affordability on the margins, has to be looked at in the context of continued improvement in the job market, increase in wages etc,” he concluded.

About The Author

New Mortgage Industry Search Engine Seeks To Revolutionize The Sourcing Of Vendor Partners

Vendor Surf, LLC, a mortgage industry technology company located in St. Louis, Missouri, has launched a new search engine, Vendor Surf encompasses the entire mortgage ecosystem – from originations through secondary markets – and features an industry-wide vendor directory that supports virtually all industry roles and departments.

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Unlike other search engines, Vendor Surf has custom filters that span 75+ different vendor categories which can be used to narrow down the field to only those value-added partners that best answer the unique requirements of individuals. Searches, which are free, are comprehensive in that vendors are identified from all industry categories on a single site. The filters, in turn, pinpoint specific vendors based on a variety of qualifiers, such as loan type, product, service, location, etc.

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In addition, Vendor Surf works as a single educational resource, allowing searchers and directory vendors to promote events, white papers, trade shows, webinars and trainings. It includes “My Dashboard” that lets searchers track their history of vendor profiles viewed and bookmark them for later reference, a “Solution Showcase” that highlights the very latest industry innovations, and weekly polls to gauge what mortgage professionals think about pertinent issues that are impacting the industry.

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Scott Roller and Craig Leabig, Co-Founders of Vendor Surf, have designed a search engine that makes finding value-added business partners easy and efficient, putting searchers in control of desired filtering criteria.  “We clearly understand the many challenges, so we wanted to create a solution that truly revolutionizes the way vendor partners are sourced in terms of the depth and breadth of the online searches conducted,” Roller said. “We view Vendor Surf as a game changer not only for those searching for the perfect vendor, but also for the vendors who are listed on the site. It’s a strategic advantage for them to be listed on Vendor Surf as it is a means to differentiate their businesses while reaching a broad, new universe of potential customers,” Leabig added.

Vendors who would like to create a profile may do so by going to

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The New M&A Craze

There has been much talk about the digital mortgage. Many view the digital mortgage as a more seamless, customer-friendly, all electronic point-of-sale. To this end, we have seen a lot of new entrants to the POS market. However, a true digital mortgage goes beyond the POS, it spans the whole lifecycle of a mortgage.

To enable lenders to mover toward this “total” digital mortgage, we have seen a lot of mergers and acquisitions with this goal in mind. For example, Optimal Blue, operator of an industry-specific digital marketplace and provider of secondary marketing solutions, announced today acquired Comergence Compliance.

Why did they do that? Comergence is a provider of third-party oversight solutions for the mortgage industry. Founded in 2008, Comergence provides an array of third-party originator (TPO), appraiser, and social media risk management solutions that verify third-party compliance in real-time, a capability unmatched in the industry. Comergence has been widely recognized by the industry for its innovations in due diligence automation and ongoing surveillance services.

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“We are thrilled to welcome Comergence to the Optimal Blue family and we are looking forward to extending their network management platform to our customers,” said Scott Happ, CEO of Optimal Blue. “Comergence solutions help build trust and confidence among marketplace participants by verifying third-party compliance in real-time, a capability unmatched in the industry.”

“We provide the best due diligence and ongoing surveillance services in the industry,” noted Greg Schroeder, President of Comergence. “We believe that by being part of Optimal Blue we can bring the benefits of our technology and expertise to an even larger segment of the mortgage marketplace.”

Michael Stallings, Executive Vice President of Comergence said, “Recent Comergence innovations, including an analytics tool to help account executives identify new TPO opportunities and a breakthrough solution for social media risk monitoring, strongly complement Optimal Blue’s existing product offering.”

“Optimal Blue and Comergence are well-aligned around our principal mission of facilitating transactions between buyers and sellers of loans,” added Scott Happ. “We are very pleased that Greg, Michael, and the entire Comergence team will be joining Optimal Blue as we execute our shared growth plans.”

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Al in all, Optimal Blue is looking to provide a more “total” digital mortgage and they are not alone. Fiserv acquired the assets of PCLender, LLC, a provider of internet-based mortgage software and mortgage lending technology solutions. This acquisition will enhance the Fiserv suite of mortgage origination services, which enable Fiserv clients to deliver the experience today’s consumers and mortgage lenders expect. Financial terms were not disclosed.

Mortgage lenders operate in an evolving marketplace in which they are challenged to deliver a more efficient lending process in tandem with a compelling borrower experience. Fiserv is working to simplify today’s lending experience for financial institutions and borrowers, delivering powerful tools to originate, process, underwrite and deliver loans in a secure, paperless environment.

“Rapidly evolving consumer expectations require a seamless approach to banking experiences, including mortgage origination,” said Jeffery Yabuki, President and Chief Executive Officer, Fiserv. “PCLender provides Fiserv with a full digital suite of mortgage origination solutions for banks, credit unions and mortgage lenders. We welcome the existing clients and talented team members to our company.”

A complement to the existing Fiserv lending solution suite, these assets provide a set of simple, easy-to-use internet-based mortgage solutions for banks, credit unions and mortgage lenders. This fully managed, end-to-end solution simplifies origination, document collection and compliance reporting, streamlining consumer direct and retail mortgage and HELOC loan origination. The technology offers a feature-rich user experience and improved operational efficiency for mortgage lenders with existing resources. Supporting lenders of all sizes, PCLender provides solutions for lenders funding up to 5,000 loans per month.

“Joining Fiserv accelerates our ability to scale our solution, while simplifying solutions for every phase of the loan process to benefit our clients,” said Lionel Urban, Chief Executive Officer, PCLender. “We look forward to leveraging our combined expertise to deliver greater client value and an enhanced experience for their customers.”

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And more recently we saw origination vendor Ellie Mae follow suite by acquiring Velocify, a sales acceleration platform. With the acquisition of Velocify, Ellie Mae is accelerating its vision of offering a fully digital mortgage by combining Velocify’s lead management, engagement and distribution capabilities with Ellie Mae’s Encompass CRM’s unique approach to automated one-to-one personalized marketing and the Encompass Consumer Connect digital consumer experience. Together, the solution will meet the needs of today’s lenders by delivering a complete digital lead capture and conversion solution for creating interest, turning that interest into an application and then funding that loan quickly and at a low cost.

Velocify’s lead management solutions help sales teams keep pace with the speed of opportunity by driving rapid lead response, improving productivity and offering actionable selling insights. The company helps sales teams sell more by streamlining and optimizing the sales process from start to finish by enabling teams to accelerate lead engagement, and implement effective workflows, ultimately helping lenders find and convert more leads, faster. Many of Ellie Mae’s Encompass all-in-one mortgage management solution customers use the Velocify solution today.

“As part of our comprehensive strategy to deliver a “total” digital mortgage to the industry, we are helping lenders to originate more loans, reduce costs, and complete the entire mortgage process faster,” said Jonathan Corr, president and CEO of Ellie Mae. “The combination of Velocify’s solution with our Encompass CRM and Encompass Consumer Connect solutions will accelerate our delivery of the most robust digital mortgage solution in the market. The acquisition will enable us to provide the first combined solution that helps lenders turn consumer interest into applications by offering a personalized, high-tech and human-touch experience. Going forward we will empower lenders’ sales teams to keep pace with the speed of opportunity, drive down costs of origination through greater lead capture and conversion, and improve productivity through actionable selling insights.”

“A digital transformation is occurring across the financial services industry, especially in the mortgage vertical in which Velocify has a leading position,” said Nick Hedges, president and CEO of Velocify. “Successful sales teams offer an end to end digital experience combined with as much human touch as the consumer desires throughout their buying process. The team at Velocify has built the leading software solution for consumer sales engagement during the early stages of the sales process. By joining forces with Ellie Mae we are very excited to extend that capability throughout the consumer buying cycle.”

Under the terms of the agreement, Ellie Mae will acquire Velocify for $128 million in cash. The transaction is expected to close in the fourth quarter of 2017 and will have no impact on third quarter financials. Ellie Mae will provide additional financial details when the company reports its third quarter results.

The bottom line is that all of these acquisitions speak to the industry’s appetite for embracing a “total” digital mortgage, and in my view that’s way overdue.

About The Author

Just Digitize Everything

I remember the late 1990s when everyone wanted to do an eClosing pilot. Everyone thought that eMortgages would blow up and go mainstream faster than you can imagine. Well, here we are over 15 years later and today everyone is talking about the digital mortgage.

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Maybe I’m old school, but to me it doesn’t matter what you call it, just do it. Lenders have and should automate and/or digitize every-thing. It just makes sense.

Why does it make sense? First, because higher interest rates and a slowing of refinances as a result demand that lenders be as efficient as possible. And interestingly, the higher rates are not scaring away younger borrowers that want a more convenient, digital process.

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According to data compiled by Ellie Mae, conventional loans remained steady at 64 percent of all closed loans by this generation, while FHA mortgages stayed at 32 percent—a market share they have held since June. The average loan amount for loans closed by Millennial borrowers in August of 2017 was $185,919, which was a slight increase from August 2016’s average $184,113, despite the average 30-year note rate having increased to 4.211 percent from 3.706 percent last year.

In August 2017, the average Millennial primary borrower was a 29.4-year-old who took out a Conventional loan of $185,919 to purchase a home with an average appraised value of $223,882. This average homebuyer had a FICO score of 724, which helped them get a 30-year note rate of 4.211 percent, and they closed on their home in 44 days. The majority (64 percent) of primary borrowers were male.

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Additionally, more than half (52 percent) of borrowers were married.

Overall, Millennials were most likely to close loans for the purpose of purchasing a home (87 percent). Refinances accounted for 12 percent of loans closed by Millennials in August.

And guess what? These borrowers want convenience. So, going digital will both make the lender more efficient and help them reach new borrowers. Beyond these benefits, going digital will also allow lenders to prove their compliance with new rules and regulations that is just not possible in a paper world. I’ll say it again: Going digital makes sense.

Some lenders may wonder: How do I get started? Going digital is actually much easier these days as compared to the late 1990s.

Why do I say that it’ easier? Because technology vendors are launching new solutions literally every day to help lenders digitize. For example, Capsilon, a provider of cloud-based digital mortgage solutions for mortgage companies, unveiled its vision for the future of mortgage production and servicing with the launch of the Capsilon Digital Mortgage Platform, powered by Intelligent Process Automation.

The new Capsilon Digital Mortgage Platform doesn’t replace a loan origination system (LOS). Rather, it integrates with leading LOS’s and uses Intelligent Process Automation to automatically complete key steps throughout the mortgage production process, from the initial loan application to delivery to investors. Unlike Robotic Process Automation, which uses computer programs to mimic simple manual tasks, such as data entry, Intelligent Process Automation uses contextual artificial intelligence to understand which documents, data and rules are required to accomplish key tasks at every step of the mortgage production process, and automatically completes these steps. Human intervention is required only for items that fall outside of established parameters.

And lenders are responding. “UWM shares Capsilon’s vision of how the mortgage industry needs to transform,” said Mat Ishbia, president and CEO of United Wholesale Mortgage. “We’ve partnered with Capsilon for years and think their technology has been key to helping UWM become the #1 wholesale lender in America.”

“The Capsilon Digital Mortgage Platform transforms the speed, user experience, and economics of the mortgage process,” said Sanjeev Malaney, CEO of Capsilon. “By leveraging Intelligent Process Automation, the platform transforms existing mortgage production and servicing processes into a modern digital factory.”

The point that I’m trying to make is that embracing a more digital mortgage process makes sense and the barriers to adoption are becoming few and far between. The real question should be: Why wouldn’t you digitize?

A Time To Reflect


In covering the mortgage space for more years then I’ll admit, I’ve always been concerned about how slowly this industry moves. In addition to moving slowly there’s this follow-the-neighbor mentality whereby lenders are hyper focused about what other lenders are doing because they don’t want to go first when it comes to doing anything new. There’s no self reflection it seems. If you’ll stick with me, I’d like to share this blog written by the head of my son’s school where he talks about the importance of self reflection:

“We focus on the outside world in education and don’t look much at inwardly focused reflective skills and attentions, but inward focus impacts the way we build memories, make meaning and transfer that learning into new contexts. So what are we doing in schools to support kids turning inward?”said Helen Immordino-Yang, Professor of Education, Psychology and Neuroscience, University of Southern California.

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“Here at Wooster School, reflection is a big part of what we do because we agree with Dr. Immordino-Yang, and understand that we learn more, and forget less, when we’ve had a chance to “think again,” “mull it over,” or even “sleep on it.” Like many an old adage, these express something we’ve always known to be true, but now also have the science to back up. Ever more frequently our teachers are providing the time for students to reflect in class, and are asking them to do so in many different ways. We take this time because we know that when done consistently and well it helps the learning stick.

“According to an article about Dr. Immordino-Yang’s and her research published by the Association for Psychological Science, “when children are given the time and skills necessary for reflecting, they often become more motivated, less anxious, perform better on tests, and plan more effectively for the future. And mindful reflection is not just important in an academic context – it’s also essential to our ability to make meaning of the world around us. Inward attention is an important contributor to the development of moral thinking and reasoning and is linked with overall socioemotional well-being.”





As you develop self awareness when it comes to your total business, you become better able to make changes.

Now that lenders have begun to get a handle on their TRID-related defects, they should have more capacity to address other defects.

“At Wooster School, we aren’t just talking about how schools can do a better job preparing our students to be better thinkers, learners, and people — or nibbling around the edges of the same old curriculum with the same methodologies — we’re taking the science and putting it into action. Our Days of Reflection, like the one we are having this year, are an opportunity for students and faculty to reflect together about some bigger picture goals related to skill and disposition development. They are also a great time for community dialogue about our shared struggles and successes. As faculty members, we are always impressed with the depth of thinking that happens on these days, and how willing these digital natives are to slow down and think about their aspirations and progress. Students have fun with it, and they learn from it. They also like the crumbcake we serve. And yes, I’ll have a big piece too. As I said, no nibbling around here.”

Why did I share that blog? Well, I thought it would be educational. It was interesting to me that an educator was talking about the power of reflection and critical thinking. I’m just not sure that goes on too much in mortgage lending, and that’s a shame.

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Case in point, the industry had a knee-jerk reaction to the recent TRID requirements. Instead of reflecting on how to make the entire mortgage process better, most lenders were just looking to comply with the rule and some were totally dependent on their LOS to ensure compliance. That’s not how it should be, and the results reflect the industry’s poor efforts.

ARMCO reported that after peaking in Q1 2016, the overall industry critical defect rate dropped to 1.63 percent in Q2, ending an upward trend spanning the previous three quarters. Defects in the Legal/Regulatory/Compliance category also waned in Q2, comprising 34 percent of all defects reported and marking the first decline in nine months. However, this category still represents the largest reported defect category.





As an industry, we all have to be more self aware so we can adapt to constant change.

While TRID-related defects are still driving the majority of Legal/Regulatory/Compliance defects, we’re seeing a decline in defects in this category.

“While TRID-related defects are still driving the majority of Legal/Regulatory/Compliance defects, we’re seeing a decline in defects in this category as a result of corrective action planning lenders undertook through the first six months of 2016,” said Phil McCall, COO for ARMCO. “As lenders determine the most effective strategies for addressing TRID-related defects, we expect to see this category decline further.”

Loan Package Documentation defects increased slightly in Q2, accounting for 26.7 percent of reported defects in Q2 versus 26.4 percent in Q1. Also of note is the increase in defects reported in credit-driven categories in Q2. Income/Employment leads this group as the third most frequently reported defect category in Q2 at 9.8 percent, followed by Borrower and Mortgage Eligibility at 8.9 percent and Assets at 6.8 percent.

“Given the magnitude of compliance-related defects lenders were facing in Q1, it’s not surprising to see upticks in other areas,” said Avi Naider, CEO for ARMCO. “Now that lenders have begun to get a handle on their TRID-related defects, they should have more capacity to address those credit-related defects. Thus, we should see those categories normalize in Q3.”

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See what I mean? It took the industry so long to comply with TRID before they finally turned to a smarter, more automated approach that is just now driving down TRID-related defects. I have two questions: Why did it take the industry so long to get to this point? Why are TRID defects still high? The answer is simple: There is a lack of true self reflection.

As an industry, we all have to be more self aware so we can adapt to constant change. When you think about it, self awareness is about having a clear perception of your personality, including strengths, weaknesses, thoughts, beliefs, motivation, and emotions. Self awareness allows you to understand other people, how they perceive you, your attitude and your responses to them in the moment.

We might quickly assume that we are self aware, but it is helpful to have a relative scale for awareness. If you have ever been in an auto accident you may have experienced everything happening in slow motion and noticed details of your thought process and the event. This is a state of heightened awareness. With practice we can learn to engage these types of heightened states and see new opportunities for interpretations in our thoughts, emotions, and conversations. Having awareness creates the opportunity to make changes in behavior and beliefs.

As you develop self awareness when it comes to your total business, you are able to make changes in the thoughts and interpretations you make. Changing the interpretations in your mind allows you to change your actions. Self awareness is one of the attributes of Emotional Intelligence and an important factor in achieving success.

Self awareness is the first step in creating what you want and mastering your business. Where you focus your attention, your emotions, reactions, personality and behavior determine where you go in life. Having self awareness allows you to see where you are and where you need to go. Until you are aware in the moment of your thoughts, emotions, words, and behavior, you will have difficulty making changes in the direction of your business. This industry has to be more self aware.

About The Author

Gaining Perspective


Ten-X, an online real estate transaction marketplace, reported a slight decline in February existing home sales. According to the company’s nowcast, February sales will fall between seasonally adjusted annual rates of 5.34 – 5.69 million, with a targeted number of 5.51 million – down 3 percent from NAR’s reported January sales yet up 7 percent from a year ago.

“At some point, rising prices, higher interest rates, and limited inventory will begin to take their toll on home sales,” said Ten-X Executive Vice President Rick Sharga. “While online search activity remains strong, indicating healthy demand for homes, the relatively weak numbers in both new home sales and pending sales of existing homes suggest that buyers may be having trouble finding properties. But monthly housing numbers are notoriously volatile, so it’s too soon to say whether we’re seeing an inflection point, or the market is just taking a breath before coming back strongly in the spring.”

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Sharga has appeared on the CBS Evening News, NBC Nightly News, ABC World News, CNBC, Fox Business, Bloomberg, CNN and NPR. He has briefed government organizations such as the Federal Reserve and Senate Banking Committee and corporations like JPMorgan Chase, Citibank and Deutsche Bank.

The National Association of Realtors (NAR) recently reported that existing home sales saw strong growth in January, confirming the uptick the Ten-X Nowcast had previously indicated and even slightly exceeding those expectations. Existing home sales rose to a seasonally adjusted rate (SAAR) of 5.69 million units, up 3.3 percent from December and 3.8 percent from a year ago – its highest level since February 2007.

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The NAR also recently reported a 7.1 percent year-over-year increase in median existing home prices to $228,900 in January. This increase marked the 59th consecutive month of annual gains and also confirmed the nowcast prediction made in January. The February Ten-X Residential Real Estate Nowcast predicts that median existing-home sales will continue to make annual strides in February, falling between $220,056 – $243,220 with a target price point of $231,638 up 1.2 percent from January and up a substantial 9.9 percent from last year’s NAR figure.

The Ten-X Residential Real Estate Nowcast combines industry data, proprietary company transactional data and Google search activity to predict market trends as they are occurring – weeks before the findings of other benchmark studies are released. Building upon the groundbreaking work by Google Chief Economist Hal Varian, Ten-X’s nowcast model extends a traditional autoregressive-forecasting model to incorporate contemporaneous information that provides significantly enhanced accuracy.

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“The data shows that the refinance market has been slowing, so if rates go much higher it’ll come to a screeching halt,” Sharga noted. “In terms of fair lending, automating may be the answer. Technology is cold and blind so it can’t discriminate.

“However,” Sharga cautions, “there is a contingent that thinks technology is a panacea that will solve all of our problems and there’s another group that believe technology will never improve what I do because my way is the best way. We need better tools, technology and systems in place overall. Technology is not a fix-all, but anyone that thinks we won’t see more and more technology improve our market is misguided.”

Lenders underestimate the cost and time of implementation of new technology. They also underestimate the disruption technology with cost operations,” added Dr. Rick Roque. “Nonetheless, the Digital Mortgage is the only way to get more done with fewer resources.”

Roque is president and founder of MENLO, a firm that advises mortgage lenders on their M&A strategies. Moving forward he believes the mortgage industry will be more automated and less regulated. “I’ve met with several commissioners in a few states and they don’t see many changes in terms of regulatory enforcement. The role between the CFPB and the states is similar to the role of the FBI and the local police. They will come in with a chip on their shoulder and not share their data or practices. That dynamic won’t change. However, I do think this administration is determined to cut regulation and we are seeing lenders more focused on automation.”

But investing in technology isn’t always easy. “When you are evaluating technology you shouldn’t just look at that new and shiny object out there,” advised PCLender President Joe Langner. “You need flexibility. Lenders may invest in a new technology to solve this one problem, but that one thing that changed is going to change again. So, lenders need to look more broadly and you need to be able to invest in technology that can be modified on the fly if things change.”

Langner is a highly accomplished executive with 25+ years of senior level sales, marketing and general management experience, ranging from start-ups to $900-million business units. He has held executive and C-level positions with Sage, Ellie Mae and Dun & Bradstreet.

Moving forward, there will also be policy changes, warns Langner. “The government is buying all these securities. If that slows, which most expect that it will, that will have an impact. Also, changes to critical forms will cause some disruption this year.

“Any time you change major forms it gives lenders cause to look at their business and how they do things. At first compliance increases cost. Companies will add new checks and balances around what you need to do to comply because can be ambiguous at first. So, costs will go up and, with volume decreasing this year, you can expect lenders to do some layoffs,” he concluded.

If we put all this into perspective, as the title of this article suggests, we have a good idea of how things will proceed, generally speaking. “There are three areas where we’ve heard the president come down,” noted Sharga. “First, he has talked about getting rid of the mortgage deduction. Second, the general premise is that the regulatory environment will be relaxed, which should help the industry. Third, is the notion of unwinding the conservatorship of Fannie and Freddie. There has been talk of privatizing them. This is where we’re going as an industry. Moving forward, technology will play a vital role in how lenders adapt.”

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Industry Hot Topics


I usually discuss a given topic that’s in the news or top of mind for me each month, but this month I want to switch it up a bit. Why just talk about one topic when there are so many topics to tackle.

For example, regulatory risk is a chief concern today in terms of both compliance and the increasing cost of compliance cutting into profit margins. So, what one or two compliance issues that are most important today? Are there other compliance risks that lenders should be aware of or preparing for?

“As a marketing company, we see a lot of concerns. There is defragmentation in mortgage marketing,” said Mary Beth Doyle, co-founder of LoyaltyExpress. “CFPB is coming down hard on what can be said, it’s getting heavily controlled. However, it is difficult for organizations to get streamlined so they are compliant.”

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LoyaltyExpress is a one of the nation’s largest providers of marketing automation and cloud-based CRM solutions for mortgage companies and banks. The company’s solutions enable lenders to automate marketing campaigns and easily manage customer, partner and recruiting data, while streamlining marketing activities, such as email, direct mail, print and gift fulfillment. This integrated approach enhances compliance by eliminating the need to share sensitive customer data with multiple vendors while ensuring that loan officers only use preapproved marketing materials that comply with regulatory guidelines.

“When we talk about the cost of compliance, there has been a psychology to recruit the a-team and let them go at it,” noted Doyle. “So, it’s a cultural change when the CFPB now places constrains. Having the controls in the system to keep communication automated and consistent is critical.”

Marketing isn’t the only sector to be impacted by skyrocketing regulation, the appraisal sector has been impacted, as well. “The regulations and compliance issues around appraising have skyrocketed,” said Jeffrey J. Bradford, founder and CEO of Bradford Technologies, Inc. “For example, the term ‘desirable’ can’t be used by an appraiser anymore because that’s subjective. There is a reliance on data and being factual. The fear of being sued or having to buyback a loan is amazing and it’s causing a lot of money to go toward appraising.”

Bradford Technologies is an innovator of valuation tools and solutions for residential appraisers. The company pioneered computer-aided appraising, was the first to incorporate statistical support in both mainstream and alternative valuation products, and currently provides one of the most adopted technologies for residential appraisers. AppraisalWorld, the company’s online appraiser community with over 20,000 members provides services focused on building trust and reliability in the appraisal industry.

The answer to maintaining compliance is consistency and accuracy, according to Ann D. Fulmer, a senior industry advisor for FormFree Holdings. “We hear a lot that loan officers are resistant to technological change that would protect the lender, but limit them. Another consideration down the road, to the extent that LOs are loosey-goosy, you open yourself up to fair lending issues. You have to defend yourself and your decision-making when you approved that loan.

“So, ask yourself: Are your decision-making processes consistent? Just because you can show that what you did was an industry standard, that doesn’t mean that you can’t be sued. The biggest risk to the industry is the lack of clarity around the new CFPB rules. Until the CFPB gets clear about what it expects and how they are going to enforce those rules, it’s paralyzing.”

“From a TPO standpoint, the paranoia ratchets up because you have to know who you’re doing business with,” added Gregory J. Schroeder, president of Comergence Compliance Monitoring, LLC. “If you are a small- to medium-sized lender you are in a crosshair because what do you do? You have to ensure compliance without destroying your profit margin. The CFPB has not targeted the smaller lenders yet, but it is coming.”

Comergence Compliance Monitoring, LLC, is a SaaS provider of vendor management solutions, currently focused on third-party originator and appraiser risk. Comergence provides lenders and appraisal management companies with tools that review and continually monitor registered mortgage loan originators and appraisers.

In the midst of all this change it’s important to assess and re-assess how you as a lender are handling this change. “Lenders are trying to do everything at once,” said Fulmer. “The CFPB was intended to protect consumers, but they are actually hurting consumers because there’s a lot of confusion.”

Doyle added that “there are state guidelines as well as federal guidelines to deal with. So, there’s a lot of interpretation to be done for sure. There’s such panic and intensity around compliance. You need to have a full audit trail to at least prove that you are trying to comply. And of course the consumer is hurt because these organizations are so paralyzed by how to interpret the new rules.”

Compliance aside, another hot topic is appealing to Millennials to both enter the mortgage industry as workers and homebuyers alike. “I have a daughter that is a Millennial, shared Bradford. “She wants to work for an employer that is having a social impact. They care about the climate, the world and the environment. There used be 2,000 appraiser trainees, now we only see a few hundred. You now have to have a college degree and many hours of experience to be an appraiser, which makes it economically unfeasible for people to get into the appraisal industry.”

In addition to Millennials turning their back on becoming an appraiser or loan officer, they’re also increasingly turning their back to homebuying, as well. So, how should the industry behave to get this group of people to want to buy a home?

“The challenge is really providing a program to help these young people get into a home given that they are already carrying so much debt in the form of student loans,” answered Doyle.

“I don’t think you can entice these guys to buy a home,” pointed out Bradford. “They want to be mobile and live in the trendiest places. If you could refinance their student loans it might entice them to do other loans with you.”

As we can all see, lenders are facing a number of challenges, but there’s one area that gets less attention than it should: oversight of third-party relationships and vendor management. “Recent regulations driven by Dodd-Frank have made managing these relationships even more critical,” reported Schroeder. “Lenders aren’t just being held legally accountable for their own actions, but for the actions of all the third parties with whom they do business. That includes not just third-party originators but other parties as well, including appraisers and software providers. We’re also seeing that originators are facing demands for more information and documentation each time they decide to apply to a new wholesaler.

“In addition, lenders that allow borrowers to shop for third-party settlement services have legal responsibility under the CFPB’s new regs in case those providers do harm,” continued Schroeder. “It’s clear that mortgage lenders must have an effective process in place for managing their service providers. But how do you keep track of what your vendors are doing in a cost-effective manner while staying focused on your own business? It can be an overwhelming task.”

So, how does the lender stay ahead of all of these issue? Many see the answer in artificial intelligence and smart technology. Let me leave you with this thought: Technology will never replace a human, but if programmed well, it can standardize the process and increase accuracy and efficiency all at the same time.

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Learn From The Politicians


TME-TGarritanoPoliticians say the craziest things. Just look at the comments made by some of the 17 Republicans running for President. It’s out of control really. However, mortgage technology vendors should take notes about what not to do from these blowhards. Here are five things to avoid:

Don’t Complain. Nobody likes to deal with someone that continually makes excuses for shortcoming. Here’s what I mean:

“Can you imagine, if after the bridge investigation began, I came out and said ‘Oh, I’ve done all my business as governor on a private email server. And, I’ve deleted now 30,000 of those emails. But trust me none of it had to do with the bridge.’ Give me a break,” Chris Christie said to CNN.

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But the only email he provided to the Legislature last year came from his private Yahoo account. Christie turned over just one set of emails to the New Jersey Legislature in response to its subpoenas about Bridgegate. That email conversation contained edits that Christie made to a statement announcing the resignation of Port Authority official David Wildstein, who has since pleaded guilty for his role in the lane closures.

Democratic Assemblyman John Wisniewski, who led the investigation, told WNYC that Christie sent those emails in December 2013 from his personal Yahoo account. The public documents had previously been released but the email address was blacked out. Don’t complain when you’re doing the same thing yourself.

Similarly, Carly Fiorina’s campaign slammed CNN and the RNC, accusing both of them of “putting their thumb on the scale.” She’s complaining about being shut out of the debates.

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“If the RNC won’t tell CNN to treat post-debate polling consistently with pre-debate polling, they are putting their thumb on the scale,” Fiorina spokeswoman Sarah Isgur Flores said in a press release.

Flores ratcheted up the attack even further during an interview on Fox Business.

“This is the status quo trying to protect the status quo, trying to protect their power, their prestige, and so they want the same people on the stage as before, and they’ve set up a system that will do that,” said Flores. In the end none of this complaining is going to get Fiorina into the debate.

Too often I hear technology vendors complain about the lack of media coverage that they get or the fact that certain vendors are always in the news. Don’t complain about media coverage, form good relationships with the media so they cover you more.

Don’t Namedrop. You just don’t speak ill of the competition because you end up looking bad. For example Rick Perry blasted rival Donald Trump in the harshest terms — even comparing him to a “cancer” and “false prophets.”

“Let no one be mistaken – Donald Trump’s candidacy is a cancer on conservatism, and it must be clearly diagnosed, excised and discarded,” Perry said, according to a transcript of his prepared remarks. “It cannot be pacified or ignored, for it will destroy a set of principles that has lifted more people out of poverty than any force in the history of the civilized world – the cause of conservatism.”

Similarly, George Pataki also called out Trump directly. Former Pataki slammed fellow Republican presidential candidate Donald Trump, who he said has been “disrespectful” toward Latinos with recent disparaging comments about Mexican immigrants.

“Yes, clearly, they’re disrespectful,” Pataki told Business Insider of Trump’s comments in a brief interview before the annual New York Republican Party’s gala.

Trump characterized Mexican immigrants in his campaign launch speech as “rapists” and drug runners when talking about how he’d focus as president on reducing illegal immigration. What happened to both Perry and Pataki? They sunk in the polls.

If you are a mortgage technology vendor don’t slam your competitors by name. You need to clearly articulate your value proposition, not waste time talking down about others.

Don’t Over-Generalize. Lenders want specifics. Speaking of Trump, the king of over generalizing is Donald Trump. When it comes to immigration he says building a wall will solve everything, and that Mexico will pay for the construction of the wall. When pressed about what to do with illegal immigrants in the country already, he said that he would round them up and send them home. How would he accomplish this? By hiring good managers. Obviously this is an over generalization that won’t solve the real problem.

Women make up a large voting block and Trump is not doing well among women so he over generalized again. “I will take care of women’s health and women’s health issues better than anybody and far better than Hillary Clinton, who doesn’t have a clue, “ he told reporters after an afternoon rally. Notice that he doesn’t give any specifics? As a mortgage technology vendor, you can’t just use buzzwords and acronyms that you think people want to hear to sell your product. You have to know your solution’s specific value proposition.

Don’t Pander. You can’t tell lenders what you think they want to hear, you have to clearly articulate your value propositions. Politicians tell people what they think they want to hear instead of the truth and they suffer for it all the time.

Former Florida Governor Jeb Bus changed his position on the Iraq War three times in the same week. In his clearest declaration yet on his feelings about his brother’s invasion of Iraq, Jeb Bush said that “knowing what we know now, …I would not have engaged.”

“I would not have gone into Iraq,” he said. But earlier in the week he told Fox News that he would have engaged, then he tried to backpedal because he knows that public sentiment is not in favor of the Iraq War.

Wisconsin Governor Scott Walker did the same think when talking about birthright citizenship. In the end Walker said, “My point is any discussion that goes beyond securing the border and enforcing laws are things that should be a red flag to voters out there who for years have heard lip service from politicians and are understandably angry.”

That’s a far cry from how the Wisconsin governor answered the same question last Monday. “Yeah, absolutely,” Walker said when asked by an MSNBC reporter at the Iowa State Fair whether he wanted to end birthright citizenship. The bottom line is that you should learn from these politicians and just tell it like it is instead of delivering falsehoods to make your system sound better.

Don’t Exaggerate. Nobody likes a person who stretches the truth and goes over the top. To this end, many politicians have exaggerating the impact of the nuclear agreement with Iran. Presidential candidate Mike Huckabee called the Iran deal “idiotic,” and likened it to events of the Holocaust, saying that President Barack Obama will ultimately “take the Israelis and march them to the door of the oven.” The Iran deal might not be perfect, but comparing it to the Holocaust is just wrong.

Politicians make the same exaggerated claims about the Affordable Care Act. Ted Cruz gave an impassioned speech on the Senate floor, a few hours after the Supreme Court ruled 6-3 to uphold the Affordable Care Act’s subsidies nationwide. The senator from Texas, who is also running for president, called the decision “judicial activism, plain and simple.”

“Today, these robed Houdinis have transmogrified a federal exchange into an exchange, quote, ‘established by the State,'” he said. “This is lawless. As Justice [Antonin] Scalia rightfully put it, without objection, words no longer have meaning.” Another crazy exaggeration.

If you’re a mortgage technology vendor, speak honestly and frankly with lenders. Don’t tell them that your system does things that it doesn’t. Exaggerating will only get you in to trouble.

I hope you learned a lot about what not to do from these politicians.

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Doing The TRID Shuffle

The TRID deadline has come and went and we are all still here. We saw a mad dash on the part of mortgage lenders and technology vendors alike to comply with this new rule. They all danced around, did a little shuffle and by now everyone has found a dance partner.

It all reminded me of a prom. The technology vendors did there best to comply and stand out so they’d be picked to escort the most lenders to the dance. And in fact, lenders did make their choices.

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For example we heard that PHH Mortgage (PHH), one of the largest providers of residential mortgages in the United States, signed a multi-year license agreement to use DocMagic’s expansive set of products to help ensure compliance with the TILA-RESPA Integrated Disclosure (TRID) rule.

“We have worked closely with DocMagic for the last year to thoroughly evaluate, test and integrate their technology and compliance solutions, and we will use various components to ensure we are TRID compliant,” said Eric Sadow, chief compliance and fair lending officer. “We are confident that our use of the DocMagic technology and compliance solutions will meet our needs and the needs of our clients, regulators, investors, partners and borrowers.”

Did you get that? PHH worked on TRID for a year. Why? “Anyone working on TRID implementation will tell you that there have been many unexpected challenges,” said Gregory E. Teal, president and chief executive officer of Ernst Publishing. “We wanted to go live as early as possible so lenders can begin using the tool and testing their processes ahead of the CFPB’s deadline. I’m very proud of our team for getting everything together so quickly. The system is available now for lenders to use.”

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Ernst programs process an average of 150 million real estate transactions every year, industry-wide. Since the company was founded 26 years ago, Ernst has processed over 1 billion transactions. The firm estimates that its patented technology is in use for 90% of the nation’s new loan originations and refinance transactions.

Smart technology vendors not only helped their clients comply, but they also offered training. For example, Ellie Mae launched its Resource Center online for lenders to take advantage of the complete library of help resources.

“Our goal is to help mortgage lenders of all sizes feel prepared and confident for the RESPA-TILA Integrated Mortgage Disclosure Rule on October 3rd and beyond,” said Jonathan Corr, president and CEO of Ellie Mae. “We are able to offer comprehensive resources and training to help our customers prepare for this major change and we’re adding new resources to respond to feedback and concerns.”

“TRID rules are complex and affect all of the financial loan institutions’ – both originators and servicers – federal and state compliance tests; RxOffice allows users to ensure their processes are compliant,” added Andrew F. Campbell, counsel with Ober|Kaler. “Once the loans are run through the system, lenders or the servicers can immediately know if they are compliant or not and they can also know what they need to do to fix it so that they can be compliant.”

IndiSoft partnered with Ober|Kaler earlier this year to provide guidance and assistance to IndiSoft in enhancing two of its compliance modules, RxOffice Vendor Management Portal and RxOffice Compliance Portal, on all the current regulatory compliances.

“The industry is in a constant flux when it comes to regulations,” said Sanjeev Dahiwadkar, IndiSoft CEO and president. “Our platform and specifically our compliance modules make it easier for users and the executive management to keep up with the current compliance mix of its portfolio and help them in making right decisions. This gives them peace of mind and saves them the time, money and effort of trying to decipher complex regulations on their own.”

What’s my point in rehashing all this? My point is that this is a testament to this industry’s ability to tackle tough challenges. Now that the challenge of TRID is over I challenge lenders and vendors alike to do even more. Let’s move beyond TRID and really think about how we can improve the whole mortgage process. The CFPB hasn’t told us to do this, but why wait for them?

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