The mortgage industry loves its acronyms doesn’t it? From LOS to LQI, PPE to GSE, AU to DU and everything in between, it’s a veritable alphabet soup out there. Two of the acronyms that get most confused are QA (quality assurance) and QC (quality control) because the industry has long assumed that the two terms are interchangeable. News flash – they aren’t, and if you’re relying on QC to achieve QA, you are in for a rough 2012. For those that don’t know, QA is systemic failure prevention; QC is a failure-detection system…and you need both if you hope to make it in the current mortgage market. For more on the differences between QA and QC, check out my article in the February issue of Secondary Marketing Executive.

Although MERS® Quality Assurance requirements are not that complex, they are time consuming. For those of us that love to read Quality Assurance Manuals for tedious procedural updates to implement, not a major problem. But many of us are busy working and looking for trusted colleagues to break trail on those issues and report back. If I may be so bold…a brief data dump incoming. Or, skip this blog and simply call me on how to meet MERS® QA requirements.

MERSCORP, by way of consent order, is now tracking and monitoring all of its members’ procedures and all loan data. So much for the gentlemen’s agreement to comply. Don’t blame MERS for the changes. The #2011-044 Consent Order passed down from the Feds is the reason for the shakedown. And with good reason. The information submitted to the MERS® System has proven to be…well…ahhem…not accurate.

In the effort of tracking and monitoring, MERSCORP is requiring all MERS® Members, Lite and General, to submit a revised QA plan for 2011 and annually thereafter. This would include the expectation that Members do what is in the QA plan and update it as needed. For the lucky General Member, you will also need to address the Annual Report, to include data reconciliation requirements. Titan tackled the data reconciliation with software, and built our MERS® Compliance suite of services to meet the conditions. Sassy.

For those servicers who have not responded, the 2011 deadline of December 31st has come and gone. The good news is…an extension has been granted through Tuesday, January 24th. Thankfully, there is room for noted exceptions on behalf of the MERS® member. But, exception or not, the enormous operational task of data reconciliation for each MIN with a minimum 17 data fields quickly becomes an exponential headache. The ability to track, monitor and clear the discrepancies without technological help is even more daunting.

Oh, one last thing, MERSCORP is rolling out a new version of their Quality Assurance Procedures, release 21.0 on February 27th. Registration and transfer time frames will be shortened, as well as adding additional fields per MIN to include an Owner Occupied and Loan Pool Identification fields. So… time to roll up your sleeves and get to reconciling or to make it a hassle free experience, call me to discuss your best course of action that won’t have you doing data entry through August.

Lazy, uninformed and disingenuous – my cup runneth over with epithets for this Congress.  It is unsurprising that our Congress and a general takeover by Communists are polling around the same approval rating.

If you are buying a home or refinancing in 2012, you can expect to pay a higher rate of anywhere from .5% to .8% for THIRTY YEARS because Congress insisted it “pay for” the short term 2% payroll tax extension with G-fees.   G-fees are an easy target, and your comprehension is not required for you to feel the impact.  For example, there are millions that still can’t define a CDO, but are quite aware that their home is worth 30% less than it was five years ago.

Every American that is trying to buy, sell or refinance their home will feel the result of this poorly timed “solution.”   Those homeowners hoping for relief from HARP 2.0 just saw the rates go up.   It is counterintuitive to harm both economic recovery and future tax revenues to “pay” for a tax cut?   Didn’t they even read the supply side handbook?  Supply side economics rests on the principal that a tax cut “pays for” itself – because it is a tax cut and encourages economic growth.

And just in case you doubt me, there it is … the written proof right on the rate sheets and lender/investor announcements.  EVERY one of them began announcing that mortgage interest rates would increase anywhere from .5 to .8% in the coming weeks.  This will not be a reflection of the market.  It will not be in response to the Fed.  This will be a direct response to the meddling of Congress in one of the most irresponsible encroachments on the free market we have seen so far from this group of boobs and yahoos.

And once again we all pay double the cost for half the benefit.

If you are a servicer, think again.  This year, December 31, falls on a Saturday and is also the deadline regulators have set for the completion of your MERS data reconciliation, your Annual Report and your MERSCORP Quality Assurance plan.

In April, the Office of the Comptroller of the Currency issued consent orders to MERSCORP and to the top servicers requiring that they refine and implement Quality Assurance procedures designed to achieve the following.

• To ensure that all data is accurate in a “three-way” reconciliation between the MERS System, their internal data and the originating documents;
• To ensure that the servicers MERS Signing Officers have met all the MERSCORP rules and procedures related to the performance of their duties;
• To ensure that a Quality Assurance Plan is in place to monitor the servicer’s performance of these goals and uses an independent auditor, either internal or external, to review that performance and
• To submit an Annual Report confirming that these and other goals, have been met by December.

It is amazing how these 4 directives can elicit such concern.  But throughout the United States there are thousands of companies that are having to address these issues and are finding that they don’t have the technology to easily accomplish the reconsolidation goals; no rules based software that can create a accurate discrepancy report; and no direct upload interface with MERSCORP to correct identified records needing changed.

Even the parts that sound simple are creating stumbling blocks for many.  How do they submit a Quality Assurance Plan that is accurate?  So many companies are not currently following the MERS procedures to the tee, but are working on putting in place what is required.

The fact is this doesn’t have to be hard.  Just like Fulfillment services, we say focus on what you know and let the industry experts help you with what you don’t.  There is a solution, there is the technology and there is a identified process for assisting companies with their MERS requirements.

Titan Lenders Corp MERS Member Services

MBA Newslink: “The MERSCORP Quality Assurance Deadline & Ghosts of Originations Past”

And if you have passed on the 2011 Annual Report, make sure you contact us about our monthly maintenance plan which will keep you MERS audit ready all through 2012.

Last week, Sen. Barney Frank (D – Mass.) announced his plans to retire, and the good folks at MortgageOrb.com asked moi for my thoughts on this news.  I, of course, took the opportunity to add some much needed snark and sass to the piece.

You can read my comments here: http://mortgageorb.com/e107_plugins/content/content.php?content.10347

In light of my latest brush with the media, I thought I would expand on the topic of Frank’s retirement with my usual vim and vigor.  Therefore, I present to you,

“The Top 5 Things You Won’t Overhear at Barney Frank’s Retirement Party:”

5. I wonder if NAMB is here?

4. I hear there’s a lot of money in being a mortgage historian.  Maybe Newt and I can carpool.

3. Did you get Mitt’s RSVP to my How to Win Friends and Influence Peddle seminar?

2. I went to Washington and all I got was this “Tea Party or Bust” shirt.

1. Don’t let the doorknob hit ya where the good Lord split ya!

Of course, there may be several folks that are secretly thinking No. 1 (I myself submitted it as my back-up quote), but let’s hope they have enough tact to keep it to themselves.

Fannie Mae and Freddie Mac recently took to Capitol Hill to defend enormous executive bonuses after Congress voted to subject GSE employees to the federal pay scale.  Seriously?  The price tag for the GSE bailout is estimated to be $169 billion and counting, as losses continue to mount.

In the real world, at least among small to mid-size companies which represents the backbone of the US economy, if your company isn’t making a profit, you don’t get paid, much less are you rewarded with bonuses.   You tighten your belt or go out of business!  I’m not sure why the GSEs and Wall Street don’t work this way.

It must be the “OPM” virus which is infecting the “pure” capitalism exhibited here and on Wall Street.  That means “other people’s money” is used to pay for failure.  But, in this case and the previous bailouts, the “other” is the taxpayer.  Apparently as an executive of Wall Street or the GSEs, it is all about what “you personally” can take home, and has nothing to do with accountability, loyalty, or success of your company overall.  This is the primary disconnect between “main street” and Wall Street.

While I don’t agree with “The 99″ protestors on many levels, it is this kind of hubris and lack of accountability among the major players in the mortgage meltdown and financial crisis that’s fueling their outrage.  And justifiably so, since it’s taxpayer dollars that allows them to achieve such wealth.  No wonder so many “99ers” favor of socialism…I mean these guys run companies that don’t make money and they get corporate welfare to support their lifestyles.

Freddie Mac CEO, Charles Haldeman’s, monotone delivery in expressing his sympathies with those who are outraged over the bonuses was downright insulting.  People lost their homes, their jobs, and their livelihood.   He made $7.8 million over the last two years.  His counterpart at Fannie Mae, Michael Williams, made $9.3 million over that same period.  Sorry, Mr. Haldeman, but I don’t think you understand….17.1 million could employ many people over a 2 year period instead of just 2.  Additionally bonuses should imply profitability, not crisis control…JUST SAYING!

You can read more about the GSEs’ justifications here: http://blogs.wsj.com/developments/2011/11/16/fannie-freddie-executives-defend-pay/

I received the following excerpt in an email newsletter this morning:

MERS can’t seem to catch a break. Delaware Attorney General Beau Biden (does that name ring a bell?) has filed suit against the company alleging it repeatedly violated the state of Delaware’s Deceptive Trade Practices Act. Biden feels that MERS engaged, and continues to engage, in deceptive trade practices that cause confusion among homeowners, investors and other stakeholders in the mortgage finance system, seriously damaging the integrity of the land records that are central to Delaware’s real property system, and leading to improper foreclosure practices. These “deceptive” trade practices fall into three broad categories. The first is that “MERS, through its private mortgage registry, knowingly obscures important information from borrowers and the information that MERS does provide to borrowers is frequently inaccurate. The opacity of MERS’ mortgage registration database makes it difficult for consumers to know of or challenge inaccuracies in the MERS System. The second is that MERS often acts as an agent without authority from its proper principal. Because the MERS System was both unreliable and frequently inaccurate, MERS often does not know the identity of its proper principal. Where the name of the owner of the mortgage loan recorded in the MERS System does not reflect the true owner, any action MERS takes on behalf of the purported owner is without authority. The third is that MERS is effectively a “front” organization that has created a systemically important mortgage registry, but fails to properly oversee that registry or enforce its own rules on its members that participate in the registry. Rather than maintaining an adequate staff to provide MERS’ services, MERS operates through a network of over 20,000 deputized non-employee corporate officers who cause MERS to act without any meaningful oversight from anyone who works at MERS.”

Inasmuch as the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the Federal Housing Finance Agency have embraced regulatory responsibility of MERSCORP, Inc. and MERS, Inc. under the Consent Order of 13 April 2011, the sovereign state of Delaware, once a fertile ground of the federalist ideals now seeks to join reckless and wasteful litigation forgetting it would likely also be necessary to join as indispensable parties all of the above named alphabet soup regulatory agencies.  Perhaps the Biden, Esq. sought political mileage from the onset of litigation, certainly it must run in the family.  Perhaps there was “fog on the glasses” obscuring the reality of ongoing reining in of MERSCORP, Inc. with a body regulatory to which it is accountable.  Perhaps this is still another in democratically wasteful expenditure of time, money, and effort while in the background the deficits of data congruity are set aright.  In any event, this most recent of litigious state bumpkins brings about hope that sanity will reign supreme, that the federal question will be acknowledged, and that MERSCORP, Inc. will ultimately be allowed in peace to render the expedited accurate service in mapping the oft incomprehensible pre-existing litany of state recordings of documents of assignment, allonges, and the preternatural muddying of waters which run deep and swift when a homeowner is faced with the emotionally overwhelming consequence of foreclosure.  States’ attorneys general should lay down their arms and assist the federal righting of the MERSCORP, Inc. ship so information may be easily discoverable for all rather than perpetuating and exacerbating the WASTE of their actions attempting to assert states rights in a nationwide question.

As for me, I believe the Delaware matter will ultimately be accorded a place on the dung heap of foul litigation lost for it was brought on the ill fated foundation of political drum beating rather than its intended redress of wrongs done.

Click here to view the embedded video.

His remarks also shed light on the current Occupy Wall Street phenomenon. Read the full press release here.

It discussed the Origination Supply Chain and the effect each part of the process has on the bottom line of a loan – securitization.  This week I attended a MERS User Conference and once again listen to companies struggling to understand the big picture, the supply chain.

There are so many parts of the supply chain and so many people and companies that only target a specific piece of the chain it seem obvious that so many don’t have a full understanding of the consequence of their actions.

When an originator takes a loan, are they thinking about that loan being purchased by Freddie or Fannie? When an underwriter completes their review are they thinking about the viability of the loan as it relates to securitization within their city, county, state or country?  And let’s not forget the title companies, the credit bureaus, the appraisers, MERS administrators and so on.  Everyone must be working for the same end goal, salability, purchasable, and securable loans.  We have made great strides in the past year, but we still have a long way to go.

We talk with brokers everyday who are interested in becoming a banker/correspondent lender.  The industry is perfectly set up for these brokers to take advantage of banker opportunities when it comes to warehouse lending and direct delivery to investors.  Many are now extending lines with only $150,000.00 net worth and same for investors.  Becoming a full fledge banker is now in the grasps of most all established brokers.

With that said, the catch is still the same, if you didn’t understand banking while being a successful broker, getting a line and being approved with an investor will not give you that understanding. Many broker to banker companies have found success utilizing outsourced services.  Partnering with companies that assist bankers with the closing, funding, post-closing and investor purchase has already proven the way of the future for this new group of bankers.

It was interesting at the MBA to see so many new bankers and to hear what is important to them now.  It is easy to identify the companies who have reached out for expertise specific to back office and those who are still struggling to find their way.  Successful brokers can become successful bankers if they utilizing the right resources, remember, time is not on your side.