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Keeping Everyone Up To Date

Transparency is a big issue. Technology should be used to make the mortgage process more accessible for everyone. For example, Roostify, a provider of automated mortgage transaction technology, today announced several enhancements for its platform, which is designed to accelerate and simplify the mortgage experience for all parties involved. The new features will help loan officers to ensure that realtors stay up-to-date over the course of each transaction.

Roostify provides step-by-step guidance in the mortgage closing process, including loan application completion, qualification document submission, and tracking of the loan closing. Borrowers provide information in a streamlined manner and will always know where they stand in the process and what comes next, eliminating potential roadblocks along the way. Lenders get to settlement faster and improve responsiveness to clients and partners.

“As our platform continues to get wonderful reviews from our customers and their borrowers, we continue to listen to their feedback and add functionalities that further enhance their experiences with Roostify,” said Roostify CEO and co-founder Rajesh Bhat.

Brett Bonecutter, branch director of Monarch Capital, a Roostify Power User, added, “Roostify is changing the game with several platform enhancements that demonstrate that they understand the needs of lenders. The smart questionnaire format prompts borrowers for documentation specific to their scenario, provides secure file upload for document sharing, and allows all parties to the transaction to view workflows. It’s saving us significant time and money on every transaction, and is allowing us to close loans faster.”

The platform’s new “Connections” feature allows loan officers to create relationships with real estate agents within Roostify and establish a unique joint referral link for each one. Real estate agents can then share the loan officer’s referral link with their clients and in turn be notified of all major events of the mortgage process – from application start to close. In addition to improved responsiveness to their real estate partners, loan officers can benefit from analytics informing them of the productivity of these relationships.

The Unknown

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TME-RBiundoThe current regulatory and economic environment has heightened the need for insightful and compliant decisioning tools, and lenders need deep and robust consumer information in order to improve portfolio stability and make more informed lending decisions. The best indicator of future behavior has always been – and continues to be – past behavior. To acquire this level of insight, lenders must leverage technology to identify potential bankruptcy risk, understand past consumer behavior and maximize profitability. By utilizing technology tools such as real-time, tradeline-level analytics, lenders can understand consumer behavior patterns and potential risk to determine the best strategies and opportunities for their borrowers.

24 Months: The Sweet Spot

If lenders want to truly obtain an insightful view of a borrower, using analytics with data across a 24-month playing field is crucial. Detailed consumer level information such as balance, payment, credit limit or account type provides insight that can identify and predict a borrower’s future credit behavior. Incorporating this borrower data into acquisition, portfolio and review strategies assists lenders in mitigating risk and offering relevant opportunities to specific borrowers.

For example, the ability to predict an individual’s propensity to pay within a certain timeframe can drive specific marketing strategies and opportunities to enhance customer loyalty. Analyzing a borrower’s credit behavior over a 24-month period can help identify unique sets of trends and characteristics, such as:

>> Spending patterns;

>> Payment patterns; and

>> Credit utilization – established patterns and impact of changing behavior.

Historical, trended data allows for better decisioning across the entire lifecycle – from acquisition to account management to collections. Data-rich technology tools like this provides lenders with the consistent information needed to identify and implement borrower-specific actions.

The Game of Risk

Past behavioral insight is readily available to lenders who leverage the right technology in order to confidently predict the future behavior of a consumer. Plus, analytic tools like scores and models can be leveraged in the portfolio monitoring process to predict the risk that a borrower may file for bankruptcy.

Scores and models tailored specifically to predict bankruptcy allows lenders to distinguish potentially profitable customers from those who are more likely to file for bankruptcy. Using a score with comprehensive, tiered segmentation schemes allows lenders to independently evaluate bankruptcy risk.  Scores such as these can support account management since it assists with enhanced segmentation and treatment or collection strategies.

Powerful Technology, Powerful Decisions

The recession may have altered the consumer credit landscape, but insight into a borrower’s potential to incur bankruptcy and to predict future credit behavior is available for lenders in order drive profitable decisions and effectively manage portfolios despite the stringent regulatory environment. Lenders are better enabled to strategically and effectively expand borrower pools through the use of technology tools like real-time, tradeline-level analytics. Managing borrower risk and predicting their future behavior by utilizing data-rich technology can help improve business performance and ensure more consistent outcomes.

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Into The Unknown

The current regulatory and economic environment has heightened the need for insightful and compliant decisioning tools, and lenders need deep and robust consumer information in order to improve portfolio stability and make more informed lending decisions. The best indicator of future behavior has always been – and continues to be – past behavior. To acquire this level of insight, lenders must leverage technology to identify potential bankruptcy risk, understand past consumer behavior and maximize profitability. By utilizing technology tools such as real-time, tradeline-level analytics, lenders can understand consumer behavior patterns and potential risk to determine the best strategies and opportunities for their borrowers.

24 Months: The Sweet Spot

If lenders want to truly obtain an insightful view of a borrower, using analytics with data across a 24-month playing field is crucial. Detailed consumer level information such as balance, payment, credit limit or account type provides insight that can identify and predict a borrower’s future credit behavior. Incorporating this borrower data into acquisition, portfolio and review strategies assists lenders in mitigating risk and offering relevant opportunities to specific borrowers.

For example, the ability to predict an individual’s propensity to pay within a certain timeframe can drive specific marketing strategies and opportunities to enhance customer loyalty. Analyzing a borrower’s credit behavior over a 24-month period can help identify unique sets of trends and characteristics, such as:

>> Spending patterns;

>> Payment patterns; and

>> Credit utilization – established patterns and impact of changing behavior.

Historical, trended data allows for better decisioning across the entire lifecycle – from acquisition to account management to collections. Data-rich technology tools like this provides lenders with the consistent information needed to identify and implement borrower-specific actions.

The Game of Risk

Past behavioral insight is readily available to lenders who leverage the right technology in order to confidently predict the future behavior of a consumer. Plus, analytic tools like scores and models can be leveraged in the portfolio monitoring process to predict the risk that a borrower may file for bankruptcy.

Scores and models tailored specifically to predict bankruptcy allows lenders to distinguish potentially profitable customers from those who are more likely to file for bankruptcy. Using a score with comprehensive, tiered segmentation schemes allows lenders to independently evaluate bankruptcy risk.  Scores such as these can support account management since it assists with enhanced segmentation and treatment or collection strategies.

Powerful Technology, Powerful Decisions

The recession may have altered the consumer credit landscape, but insight into a borrower’s potential to incur bankruptcy and to predict future credit behavior is available for lenders in order drive profitable decisions and effectively manage portfolios despite the stringent regulatory environment. Lenders are better enabled to strategically and effectively expand borrower pools through the use of technology tools like real-time, tradeline-level analytics. Managing borrower risk and predicting their future behavior by utilizing data-rich technology can help improve business performance and ensure more consistent outcomes.

About The Author

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The Dagong Show

*The Dagong Show*
**By Phil Hall**

new-PhilH***There is a good chance that you are unfamiliar with the Dagong Global Credit Rating Co. This Chinese credit rating agency is mostly unknown in the U.S., but it is already making significant inroads in other parts of the world, and there is no reason to believe that it will not have a major presence in the U.S. sometime in the near future. Personally, I am glad to see Dagong’s emergence because it offers the only serious challenge to three of the most conspicuous simians among the 800-pound gorillas that no one in the financial services orbit wants to acknowledge: the problematic U.S. ratings agencies.

****For the past five years, the role played by Standard and Poor’s (S&P), Moody’s Corp. and Fitch Ratings in the run-up to the 2008 economic crash has barely been acknowledged by the federal government and the mainstream media. Oh, yeah, Eric Holder’s Justice Department filed a suit against S&P earlier this year, but that is mostly seen as crass payback for the agency’s decision to downgrade the U.S. government’s credit rating in 2012 following the debt ceiling debacle – S&P’s pre-2008 actions were virtually identical to ratings offered by Fitch and Moody’s, but the latter two maintained Washington’s AAA rating in 2012 and were strangely spared the wrath of Holder. The credibility of the Holder campaign against S&P was further obliterated by his department’s decision to leak the news of the lawsuit to the Wall Street Journal before any legal documents were filed in court.

****For the most part, the three agencies have looked back at their disastrous ratings of toxic mortgage-backed securities, shrugged their shoulders, uttered an insincere “Oops!” and kept on trucking. Today, the relationship between this threesome and the U.S. financial services industry is a stale case of business-as-usual.

****Maybe it is time for the status quo to be shaken up. When the Chinese government began trumpeting Dagong as an alternative to the American credit rating trio in 2010, it called for more honesty and transparency in the credit rating process. No less a figure than Chinese President Hu Jintao announced the need for an “objective, fair and reasonable standard” that would “not be affected by ideology.”

****Of course, having Hu Jintao call for ideology-free fairness is equal to having Miley Cyrus advocate the importance of modest ladylike behavior – but even if the messenger was the wrong person, the message was still long overdue.

****In July 2010, Dagong first gave Washington an AA rating, which it downgraded to A+ with a negative watch four months later. That was eventually dropped to an A- and last month Dagong downgraded Washington’s credit rating further to an A, noting that the federal government was “still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future.” The U.S. credit agencies, in comparison, viewed the recent shutdown and debt ceiling crisis and left their ultra-high ratings of Washington unchanged.

****Needless to say, Dagong is not among the most favored entities in Obama’s Washington. The U.S. Securities and Exchange Commission will not provide it with Nationally Recognized Statistical Rating Organization designation, claiming that Dagong does not “comply with the recordkeeping, production, and examination requirements of the federal securities laws.”

****However, the view from across the Atlantic is somewhat different. In June, Dagong became the first Asian credit rating to receive approval from the European Securities and Markets Authorities, which gave the agency approval to provide services in the 27 European Union nations. Hmmm, what does Brussels know that Washington doesn’t?

****Dagong has also teamed up with Russia’s RusRating and an American entity called Egan-Jones to create the Universal Credit Rating Group (UCRG). How the UCRG will operate remains to be seen, but its arrival provides some much needed oxygen to the game.

****While Dagong is obviously not in a current position to overthrow the supremacy of S&P, Fitch and Moody’s, it has already chiseled out the first crack in their credit ratings supremacy. Ultimately, time will be Dagong’s ally – and in the none-too-distant future, the big three will have to scoot over and make room for a fourth player from across the Pacific. And if Dagong’s recent analysis of the Washington credit worthiness is any indication, it will offer some much needed honesty and frankness – which, on its own terms, is not something that often blows out of Beijing.

The Strong Will Survive

*The Strong Will Survive*
**By Tony Garritano**

TonyG***I talk frequently about the trials and tribulations of being an LOS these days. They are the system of record and with all these new rules, they are being forced to spend a lot of money just to keep their clients compliant. Well, as with most things in life, the strong will survive. The strong will continue to update their solution and stay ahead of this curve. To this end, I heard that the Encompass360 Spring Release contains more than 200 updates and enhancements and introduces significantly greater control and oversight of loan originator (LO) compensation plans.

****Major enhancements include:

****Improved LO Compensation Management: Helping mortgage lenders prepare for the January 2014 deadline for new Consumer Finance Protection Bureau (CFPB) rules by providing them with greater management, tracking and reporting capabilities over their compensation programs. With this upgrade, lenders can now establish and manage multiple compensation plans for both brokers and LOs. Encompass360 automatically applies the correct broker compensation plan to loans imported through Ellie Mae’s Encompass TPO Web Center, a secure web portal for lenders to work and interact with their third-party originator partners. This upgrade helps eliminate errors that can occur with manual calculations by automatically populating the information into the Good Faith Estimate for proper disclosure. In addition, the upgrade also maintains a financial history log for audit purposes.

****4506-T IRS Form eSignature Support: Giving loan originators the ability to accept e-signed 4506-T tax return income verification forms from the IRS when ordered through Encompass360’s integrated Encompass 4506-T Service powered by CoreLogic. Using Encompass 4506-T Service, originators can electronically order, send and receive e-signed forms. When the borrower returns an e-signed form, it can go directly into Encompass360’s secure electronic loan folder without first going through a third-party document service.

****Loan Quality Enhancements: Offering Ellie Mae Total Quality Loan (TQL) program participants greater and immediate visibility into the loan process by allowing the ability to track the status of ordered income, compliance, fraud and valuation services inside Encompass360. These enhancements also provide both lenders and investors better visibility into loan status.

****Investor Guidelines and Eligibility Rules: Providing lenders updated links to current major investor guidelines and eligibility rules inside Encompass360 via the integrated Encompass Product & Pricing Service. Additional functionality helps prevent Encompass360 users from offering invalid or stale pricing to loan originators when investors are re-pricing rate sheets.

****New Encompass Flood Service: Giving originators the ability to order flood determinations and certifications as well as Life-of-Loan services   directly from the Encompass360 loan file. This new service helps originators save time by returning flood certifications directly into the borrower’s electronic loan file within Encompass360.

****Expanded TPO WebCenter Capabilities: Furthering Ellie Mae’s commitment to provide additional channel support for wholesale and correspondent clients, the Encompass360 Spring Release also expands the capabilities of the TPO WebCenter by providing online status messaging to improve communications and visibility between lenders and their third-party originators.

****“Loan originator compensation continues to be a huge concern for both retail and wholesale lenders, and it looms even larger now with the June 1, 2013 effective date and January 2014 deadline for the new CFPB rules,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Ellie Mae’s Encompass360 Spring Release includes sophisticated functionality to test for compliance, drive and monitor compensation plans and provide an audit trail for regulators, as well as many additional enhancements to help lenders improve loan quality and efficiency.”

****As I said when I started this column, the strong will survive. To this end, Ellie Mae will most certainly be one of those survivors.

Slow Recovery, But Good Technology News Ahead

*Slow Recovery, But Good Technology News Ahead*
**By Tony Garritano**

TonyG***This study had me jumping for joy this morning. The William Mills Agency has released its 10th Annual “Bankers as Buyers” survey. This year’s findings indicate a slow but positive climb out of the financial crisis. Strength is returning to the financial services industry, and established technologies are gaining more ground, according to the research. Here’s why:

****Interestingly, this year’s survey found the largest percentage increases in technology spending in the coming years will not be from the larger institutions, but from the next tier of banks, those between $1 billion and $10 billion, according to IDC Financial Insights.

****Some key findings from this year’s “Bankers as Buyers” survey include:

****>> North American financial institution technology spending is expected to increase to $57 billion according to IDC Financial Insights.

****>> A total of 14,210 financial institutions make up today’s depository landscape, which is down 3.7 percent from 2011 according to the FDIC and CUNA.

****>> While much of the focus on payment technology is on mobile, financial institutions are looking at improvements in online payments, ACH, P2P payments and even prepaid payment cards to attract customers.

****>> Mobile Banking gained a stronger foothold in 2012 as financial institutions sought to meet increasing consumer demand for anytime, anywhere financial services.

****>> Consumer Mobile Banking is now used by 33 percent of mobile consumers according to Javelin Strategy & Research.

****>> According to the 2012 KPMG Community Banking Outlook Survey, 47 percent of respondents identified regulatory and legislative pressures as the most significant barrier to growth over the next year.

****>> Raymond James predicts North American bank IT spending will continue to grow at the three-year compound annual growth rate of 3.1 percent.

****>> An older technology that is getting increased adoption in financial institutions is branch/teller capture with a 98 percent expected adoption rate in 2013 and 2014, according to Celent.

****>> Cloud computing is a reality now, financial institutions no longer need to be convinced, rather executives are asking about different cloud strategies, according to Dan Holt, president and general manager, Managed Services, CSI.

****>> Being able to leverage data will be increasingly important to a financial institution’s profitability, both in terms of serving consumers and in serving small businesses according to Jim Swift, CEO of Cortera.

****>> According to Celent, 80 percent of financial institutions are considering mobile RDC, enabling a consumer to take a picture of a check and email it for deposit.

Rethinking The Mortgage Process

*Rethinking the Mortgage Process*
**By Roger Hull**

RogerH***As 2013 dawns, digital commerce has changed the way companies work, operate and interact with customers. Even in the mortgage industry, the web has changed how lenders market themselves, take applications and manage software.

****But one area of the mortgage workflow that is still stuck in the previous century is the factory-line, document-centered approach to closing a loan. Instead of walking a document through a series of check-points, which can lead to bottlenecks and inefficient use of time, lenders must embrace data-centric loan operations. The transition to a data-centric workflow will better equip lenders as a whole and revolutionize the mortgage industry we know today.
****

Data-Driven Loan Cycle Saves Time, Money

****Document-driven processing is no longer the best option for mortgage lenders to work with. The outdated process wastes valuable time and money, does not scale well and lacks the desired level of transparency. Most LOS systems only support sequential processes; in other words the loan document still has to pass through origination, processing, underwriting and closing one by one, which prevents other staff members from working on the loan simultaneously.

****The total time spent moving a loan from application to closing typically takes anywhere between 30 and 150 days to complete, costing anywhere from $1,000 to $3,500. Not only does this approach to loan fulfillment require more time and money, but it does not provide the desired level of transparency, often preventing investors from evaluating their loan until after closing.

****The differences between document-driven and data-driven workflow may look subtle from the outside, but the result is dramatic. The key is a mortgage technology platform that feeds the standardized loan data to all pieces of the loan cycle in real-time, eliminating the “factory line” of today’s systems. By relying on data over documents, lenders have the freedom to work on pieces of the loan they want without having to wait on the various participants to finish their task.  Enabling participant to concurrently perform tasks on the loan file significantly reduces cycle time.

****A data-centric approach also enables automated decisioning to further streamline loan fulfillment processes, significantly reducing the need for manual evaluation documents and manual checklists with each step of the loan cycle. The automated decisioning function can also immediately evaluate data within specific criteria to provide a final loan review assessment.

****Data-centric origination also provides clearer transparency and more accurate risk analysis. As origination staff and underwriters finalize the loan for closing, investors and secondary marketers can access the loan file at any step. This provides them the ability and flexibility to evaluate risk, set pricing and arrange MBS packages in parallel with the loan working its way to closing. When a data-centric loan platform is combined with process orchestration, the average lender can cut 30 percent of more off the time and cost needed to complete a loan.

Creativity Counts In Lending

*Creativity Counts In Lending*
**By Tony Garritano**

***We like to put the spotlight on lenders that are using technology in a creative way. For example, today I learned that United Wholesale Mortgage (UWM), a top ten national wholesale mortgage lender, has designed and launched a unique dashboard-level reporting system for brokers. Dubbed Account Success Report (ASR), the proprietary system tracks and analyzes brokers’ loan quality, efficiency and production. A monthly report is produced containing key information that gives brokers visibility into their performance and how they can improve their status with UWM.

****ASR’s functionality resides within UWM’s broker portal, EASE (Easiest Application System Ever), where it can be accessed 24/7 by brokers and is updated with new statistics on the first of each month. ASR’s dashboard offers an easy-to-view snapshot of key performance indicators (KPIs) such as submission to close percentage, volume closed in dollars, approved loan percentage, average touches by underwriters, FICO score average, LTV average and more. Brokers are scored and assigned status beginning with Diamond being the top level followed by Platinum, Gold, Silver and Bronze. Each status accompanies different benefits to doing business with UWM.

****“The idea behind the launch of ASR is simple: we want to provide our customer base with detailed information on their success with UWM and the type of business they are sending,” said Mat Ishbia, president of UWM. “We are providing transparency into how UWM measures each account, enabling them to work on improving these metrics. Our ASR is more focused on their loan quality and efficiency with UWM, rather than production or other aspects.”

****Company officials say that ultimately brokers benefit from the transparency ASR offers because it aids in making doing business with UWM as easy as possible. UWM’s companywide mantra is “Lending Made Easy” and ASR further adds to its value proposition to brokers by delivering second-to-none service and support.

****Any account owner that is approved with UWM can take advantage of the functionally simply by logging into their broker portal, EASE, and viewing the dashboard.

A New Take On Moving Lending Online

*A New Take On Moving Lending Online*
**New Product Hits The Market**

***Here’s a new twist on online transparency: Altisource launched Hubzu, an online residential real estate marketplace. Hubzu improves the online home buying and selling experience by making it easier, more efficient and transparent from start to finish. Hubzu puts the entire experience online – from searching and bidding to financing and closing. Effective today, Hubzu replaces GoHoming, Altisource’s current online marketplace for real estate.

****Hubzu is live at Hubzu.com and includes all real estate inventory that was previously on GoHoming.com, along with an enhanced user experience and expanded functionality. The launch capitalizes on Altisource’s position as a global leader in high-value, technology-enabled residential real estate solutions.

****“We’ve had a lot of success with GoHoming, facilitating nearly 60,000 home sales to date,” commented Scott Wielar, General Manager of Hubzu. “However, to stay at the forefront of the market, our brand experience and scope of services needed to evolve. We listened to our customers and redesigned the user experience to make the entire real estate transaction process easier for home buyers and sellers. With the new features and functionality, we are further extending our efficiency and transparency in facilitating the home buying and selling process,” continued Wielar.

****Buyers can search for homes, bid to buy homes via auction or the traditional offer process, or use the “Own It Now” feature to edge out competing bidders and win an auction immediately. The website then guides buyers through the contracting and financing process in one centralized online location. For sellers, Hubzu offers faster, easier sales through increased marketing visibility and the ability to track bids and respond to offers online. In 2012 and early 2013, Hubzu plans to roll out functionality enhancements, new features and additional inventory for sale.