February 12, 2008
Filed under: Quality in Lending — admin @ 7:40 pm
Ruth Lee
The Future Mortgage Leaders Program of the MBA:
“is dedicated to identifying and cultivating the next generation of industry leaders by delivering a comprehensive leadership training experience for selected participants through three events offered throughout the year.”
For years, I owned my own mortgage company. I was more than happy to stay isolated within my own fiefdom, allowing others to take on the labor of advocacy and education for my industry. I was a passive participant in the future of my own industry. Upon moving to the fulfillment side, I discovered that there was a breadth to the industry that I really didn’t understand or appreciate. I discovered that there was a need for people that fundamentally understand the rigors of the mortgage market to assist with shaping the future of our industry.
Last year, I was honored to become one of the 40 odd alumnae of Future Mortgage Leaders for the MBA. After several projects in urban areas, like Oakland, Detroit and Miami, our class was presented with the task of presenting an economic development plan for Naval Station Roosevelt Roads in Puerto Rico. And while the work itself was fascinating on many levels, there was much more to be learned through the process.
The FML class is usually comprised of a broad cross-section of the industry. With the MBA selecting both the participants and the teams, they work to ensure that you are given not only the opportunity for success, but the enrichment by peers with entirely different perspectives and skill sets within the mortgage world. The alumnae group for the FML candidates was also very gracious in reaching out and offering guidance.
In the context of recent events, it is more evident now that ever the importance of this and similar education programs. For professionals who truly care about the future and want to succeed in this industry, a fuller understanding of the forces at work, the results of certain actions and our individual responsibility to uphold quality standards is key.
Participants in the Future Leaders Program:
- Get a strategic perspective of the future of the mortgage industry delivered by industry leaders.
- Learn about the federal legislative process and meet with their elected representatives in Congress at MBA’s National Policy Conference.
- Working in teams, develop a holistic approach to community economic development and its impact on housing and commercial development for presentation to economic development experts.
- Graduate at MBA’s Annual Convention and join a national network of professionals dedicated to the real estate finance industry.
January 24, 2008
Filed under: HR 3915, Mortgage Industry Legislation, Quality in Lending, S.2452 — admin @ 2:54 pm
Ruth Lee
I spend a lot of time attempting to maintain a solid, working knowledge of the events, milestones and issues facing the mortgage world. However, yesterday, I was humbled when a client asked me about the new legislation being proposed. His specific question was about the difference between the House Resolution 3915 and the new Senate version S. 2452. At that moment, I realized that although I have read about and spoken about both of these bills, other than big-hand, little map analysis, a la’ primetime news… I really just had rumor, innuendo and “sound bytes” to offer.
The real question is: how will the most substantive legislative reform EVER proposed impact our industry? Which one offers what, and how does that impact our ability to execute our work as mortgage originators?
Unfortunately, upon going back to do a little research, I came away with many more questions than answers… As such, I would like to explore some of these topics… lay out a little bit of fact, dig into the meaning behind cleverly worded language.
Some of the most interesting topics of our day are addressed in the legislation, and I would like to address them here: is YSP finished? Are mortgage brokers going to survive? What regulatory agencies will be affected, empowered or denuded? What cottage industries will arise to support the new legislation? What industries will be shut down in the wake of the legislation?
More to come over the next several weeks!
January 18, 2008
Filed under: Customer Service, Quality in Lending — admin @ 12:29 am
Ruth Lee
Customer service means many things to many people. However, in the mortgage industry, the definition of customer service is changing. For several years now, customer service has only been defined by speed and turn-time. The “customer” was defined by who was driving the volume: the originator.
Today, The “customer” in customer service are a wide range of institutions that rely on quality production to ensure their viability in a changing market. These include the investor, the hedge fund, the world banks and, finally, the originator. The originator was mentioned last because they are now last on the list of parties to the transaction that can demand speed.
Volume no longer rules the industry; quality production – loans that can actually sell- rules the day.
January 15, 2008
Filed under: Closing, Post Closing, Quality Control, Quality in Lending — admin @ 9:53 pm
Mary Kladde
One of the biggest objections I find to using fulfillment services such as those offered by Titan’s is control over document production. At Titan, we require control over the document production process as this is one of the defining moments in a loan’s life. As many lenders know, the production of loan closing documents and the overall facilitation of the closing process often times has the single most significant impact on post closing performance to include warehouse line management and timely investor purchase turn times. Not controlling this process would make it impossible to provide meaningful service reps and warrants.
Most of our potential clients have gotten used to producing docs, even as a broker, and cannot fathom why we would want or need to take that level of control away from them. Let’s face it, as a service company you’d be insane to rep and warrant what you can’t control. Looking at the market today, there are very few outsource fulfillment companies left that will “only” do post-closing. It is specifically due to the fact that without controlling the closing process, you are endlessly cleaning up small, yet significant mistakes. Mistakes, that if caught in the document and closing process, would have taken only moments to resolve at the time; now consume time and money for days in post closing. Not controlling the closing process means that you are cleaning up other people’s mistakes. And right, wrong, or indifferent, these mistakes roll down hill and fall onto the shoulders of the last person to touch the file. It’s no longer an issue of who or how the mistake was made, but how long it has taken to clean up and clean up always seems to take longer than expected.
Today, there are innumerable doc engines that will produce a doc set for a closing in a matter of minutes. However, many clients are not aware that there are relatively no reps and warrants for the accuracy of those document packages specific to investor programs and requirements. With few exceptions, the client is totally reliant upon the infallibility of the doc engine and in-house expertise and experience to not expose them to purchase issues or warehouse line loss. In addition, the lender is also reliant upon the accuracy of in-house data entry. “In-house” there are no reps and warrants against losses from poor employee performance or lack of experience.
When using these doc engines, it is important that the lender employ an experienced closer. Not a processor that knows how to use a doc engine, but an experienced closer. The fact is most problems for both purchase and repurchase happen in closing. An experienced closer knows that document production is the easiest part of their job. The work they perform on the closing and funding audit to ensure accuracy, compliance, and adherence to the Final Approval Clear to Close are the real work in closing. And, it is a true fact that it is almost impossible for a processor to audit themselves.
Here at Titan, we are able to produce figures for the settlement agent prior to receiving the Final Clear to Close Approval. This enables our lenders to disclose fund requirements to the borrowers well in advance, securing their customer’s confidence in the transaction. While the lender continues toward their Final Clear to Close Approval, we simultaneously perform an impartial 3rd party audit of the file, complete verbal verifications of employment and the necessary compliance and fraud checks needed to produce a clean and timely disbursement. All work in unison to produce and deliver documents to the settlement agent when expected. At Titan, we have the option of being able to accomplish the meat of the closing work, even as we are waiting for the Final Approval to send live docs. Experienced closers allow Titan to perform with agility not only for the borrower, but for the lender, ensuring a purchasable loan package.
January 11, 2008
Filed under: Foreclosure, Mortgage Industry Trends, Quality in Lending — admin @ 5:25 pm
Ruth Lee
Over the last few months, it is hard not to notice all of the gleeful hand-rubbing and “I-told-you-so-ing,” as disgruntled ex-employees, ex-insiders and ex-originators Monday morning quarterback the potential demise of one of the country’s largest lenders. The Implode-o-meter forums froth with idle comments from bored survivors, with a few fantastic exceptions. The fact is that no one hit the meter because Countrywide’s mean old underwriters didn’t accept your trumped up appraisal… the industry hasn’t lost its potency over extended underwriting or closing turntimes… (In fact, many would argue that the push for volume over quality was instrumental in the collapse.) Even the more egregious slights, like the ones they are going to court over, well, they just weren’t the fulcrum either. The reason that we are in trouble is simple: there are many homeowners that cannot pay their mortgage and foreclosure is BAD for business.
There are a thousand reasons why homeowners can’t pay their mortgage: some chose poor loan products, others were coerced into them, many bought houses they couldn’t afford, real income is declining, productivity is increasing causing manufacturing jobs to evaporate, the value of the dollar is falling, Katrina, rising health care costs, Wall Street made some bad calls on the whole underwriting thing. One of the main reasons I would argue: we have not been compelled or incented to save; we are incented to spend. In our consumer climate, if you can’t become an millionaire in America; being a “Visa”nairre is almost as good.
Investors relied on the stability of the American mortgage; real property as collateral, a track record of strong repayment and a well-established rule of law. But, as that same collateral depreciates, the track record erodes into a Cliff’s Notes of bad assumptions and worse performance, and regulators scramble to respond with ham-fisted alacrity, those enticements are gone…leaving a sudden desire to invest in anything that doesn’t have the word mortgage in the title. Without investors, we have less liquidity. Without liquidity, loans must compete for those dollars…and guess which ones are winning…definitely not the wage-earner stated, pay option ARM on a non warrantable igloo in downtown Miami.
I am not an apologist for Countrywide; frankly, I am just a practical, steely-eyed capitalist. There is a true link between the demise of an institution the scope and size of Countrywide and investor confidence in the industry as a whole. Since investor confidence is a key factor in how we are going to rebound, and many of us still in the industry need the rebound sooner than later, I am hoping that they are able to recover and flourish. I finally understand the impulse for bailouts and intervention. Whatever the response, we need action. We need resolve to adapt and respond to our investors. Neither their family nor mine can eat “I told you so.”
January 8, 2008
Filed under: Correspondent Lending, Mortgage Industry Trends, Quality in Lending — admin @ 9:24 pm
Ruth Lee
I never fail to marvel at the sheer survivability of the entrepreneurs in the mortgage industry. For those that are sounding the death knell of the small mortgage entrepreneur, I wouldn’t ring it too loudly. Most of the mid-tier wholesale lenders are fleeing from wholesale production and anything to do with the word broker.
Any quick overview of the implode-o-meter will show a who’s who of the players in the wholesale arena that have all exited stage left by force or design. Plagued by the inability to fund many products through their line, draconian haircuts, exposure to risks from brokers, and a general lack of profitability in wholesale… they have made the only sound business decision available…stop the insanity.
However, from the ashes does rise the phoenix of the small correspondent lender. Without massive overhead and unruly production, they are still offering boutique wholesale. They don’t have massive rate sheets or innovative technology. They don’t offer hundreds of products. They have a small line, a small select group of brokers and a willingness to produce quality loans.
Perhaps it is the genesis of a new class of wholesalers… ones that offer conservative yet substantive support to their brokers. Wholesalers that, at least right now, are not interested in risks…. Or getting it done for the sake of getting it done. They have proven that they have a business model that supports their survival.
