feb 2011 final print

8/7/2019 Feb 2011 Final Print

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ssue 043

February 2011

TheNicheReport.com

Internet MortgageLeadsA revolution that needs asolution.

10 Bringing UpThe RearTom Deutsch, ExecDirector, AmericanSecuritization Forum

543020 Tips forOriginatorsto GenerateMore Leads

FEATURE ARTICLE!

Wall Street Reformand Protection ActTitle X: Bureau o ConsumerFinancial Protection.

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http://slidepdf.com/reader/full/feb-2011-final-print 6/566 February 2011

NICHE REPORTSCONTENTS Issue 043 February 2011

FOUNDER & PRESIDENT Robert [email protected]

CO-FOUNDER & PRESIDENTDavid [email protected]

MANAGING EDITOR Stewart Mednick [email protected]

EDITORIAL / CONTENT MANAGERKristen [email protected]

ACCOUNTING MANAGER Shawna [email protected]

ADvERTISING DIRECTORJessica Grizzle

[email protected]

ADvERTISING SALESHeather [email protected]

PRODUCTION MANAGERHenry [email protected]

PRODUCTION ASSISTANTDawn [email protected]

COLUMNISTS &

CONTRIbUTING AUTHORS Martin AndelmanLaKrishia ArmourJustine AssalCathy Blaszyk Tim DavisKaren DeisRocky ForoutanPeter HébertBill McKnightStewart Mednick Rick Roque

Internet MortgageLeadsROCky FOROUTANCeO,Lender411

A revolution that needs a solution.

10

Take My LeadJUSTINE ASSALCertified MOrtgage COnsuLtant

16

Tips for Originatorsto Generate MoreLeadsCATHy bLASzykViCe President Of Lender serViCes

CLOsingCOrP

30

Seven New Ideasfor Winning AgentReferralsLakRISHIA ARMOURMarketing COntent sPeCiaList

a La MOde

34

Characteristicsof Top ProducingLoan OfcersTIM DAvISMOrtgage Marketingand saLes COaCh

Where do you stand?

14DEPARTMENTS

09 EDITOR'S FORwARD

41 APPRAISER SOUND OFF

37 TECHSPOT

43 wHAT'S yOUR MORTGAGE IQ?

54 bRINGING UP THE REAR

50 LENDER & RESOURCEDIRECTORy

AGENCy & FHA

HARD MONEy & NON-PRIME

COMMERCIAL

CONSTRUCTION

JUMbO SERvICE PROvIDERS

20 Wall Street

Reform and

ConsumerProtection ActTitle X: Bureau o ConsumerFinancial Protection.

PETER HébERT



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SUbSCRIPTIONS

This publication is intended or real estate nance proessionals

I you are a mortgage broker, lender, loan ocer, or real estateproessional and you do not currently receive The Niche Report,please go to www.thenichereport.com.

An annual subscription is $47.95 (twelve months/twelve issues.)For additional copies being mailed to the same address please call866.964.2695 or email us at [email protected] multi-copy discount.

Send address change requests to [email protected] to include the old address.

To opt-out o receiving The Niche Report, please send yourrequest, including name, company name, and address [email protected].

ADvERTISEMENTSTo inquire about advertising in The Niche Report, please call866.964.2695, or send an email to [email protected]. Visitour website, www.TheNicheReport.com to download a copy o our Media Kit.

EDITORIALS / ARTICLES

To submit an article or consideration in The Niche Report,please send an email to [email protected] or call866.964.2695. We are interested in original writings relevant tomortgage brokers and other real estate nance proessionals.

I you have a comment or question about an article or editorialpublished in The Niche Report, or i you have a suggestion or atopic you would like to see eatured in a uture issue, please sendan email to [email protected].

THE NICHE REPORT POLICy

The inormation and opinions expressed by contributing authorsand advertisers within The Niche Report do not necessarily refectthose o BODA Publishing, LLC employees and should not beconsidered as endorsed or recommended by BODA Publishing,LLC.

Published monthly by BODA Publishing, LLCPO Box 494, Bentonville, AR 72712Phone: 866.964.2695 Fax: 703.991.2362Email: [email protected] www.TheNicheReport.com



I you are not part o the solution, you are part o the problem.

This seems to be a saying that has held much merit over the years. In today’s economic envi-

ronment, it seems to have some relevance as well. However, I want to put a bit o a dierent

spin on this mindset. When I was in the Navy, I served under an ocer that had an “open-

door” policy. Basically, i you wanted to ask, tell, or otherwise speak to him, just knock on the

door. I did that once. The rst time I did, I had a complaint about an operational procedure.

The complaint was well received by the ocer. Instead o praise or validation, I was rebutted

with a statement that blind-sided me.

“So, Petty Ocer Mednick, what is your suggested remedy to the problem?”

“Sir?”

“Are you suggesting that you can just come into my oce with a problem and expect me to remedy it or you or anyone

else? I should allocate resources to perorm a task that you are already well-versed and knowledgeable and you can just

as easily provide a recommendation or action plan?”

“I just wanted to bring it to your attention, Sir.”

“Well, you have, now bring to my attention a plan o action to resolve this issue. And moving orward, don’t ever come

to me with a problem unless you have also a recommended solution….”

Wow. A lie lesson learned. So, to this day, should an issue in lie ever cross my path that I eel warrants resolution, I will

have a suggestion or resolution to ollow. Now, The Niche Report receives many letters rom the readership, and many

are complaints about a myriad o things in the national spotlight, local to the reader, articles in the magazine, etc.

Here is my challenge or all you wonderul readers or 2011: complain ‘til your heart is content, then suggest a solution.

In any acet o your lie, whether it is business, raising the kids, or talking to the signicant other, suggest a solution

to a problem about which you initiated the conversation. You may nd a new perspective to the problem when you

attempt to gure out a solution.

And that is what this issue is about: solutions. The theme or this month is lead generation, but that is a solution to the

problem o lack o business, right? Rocky Foroutan is the CEO o Lender411.com and has a ne article about solutions

to generating great internet leads. Bill McKnight writes an excellent column about the problems with the new appraisal

laws and how his ethics may be a solution. Tim Davis oers seven characteristics o a top perorming loan ocer as

a solution to poor perormance. Peter Hebert continues his exploration into Wall Street reorm as a solution to the

debacle o the last three years. Lead generation, technology, and the new laws are also topics o articles by our usual

suspects o columnists and columns. So roll up your sleeves and let’s get cracking!

Cheers!

Stewart Mednick

Managing Editor

EDITOR'S FORwARD

TheNicheReport.com


http://slidepdf.com/reader/full/feb-2011-final-print 10/5610 February 2011

Leads are the lie blood o the mortgage industry. Weall know it. Leads are what

acilitate the connection between bor-rowers and lenders, and without theright inormation, you have got noth-ing… a ew word-o-mouth reerrals,maybe, but no dependable fow o

resh business.In my years as an internet

marketer, I have seen a massive shit occur in the way prospecting is pursued in the mortgage industry. Postcardsand cold calls were the name o the game twenty years ago,but these tools do not cut it on their own anymore. A ull85 percent o mortgage originations start with an internetsearch; with a borrower shopping online or the rightmortgage. Marketers have spent the last decade and a hal developing websites and online tools to enable consumersto match with lenders on the web. This was the genesis o the internet lead industry, and today, internet leads havebecome a standard asset; a necessary part o any lender’smarketing arsenal.

However, as internet leads grew in popularity, moreand more marketing companies tried to dip into the pot.As is the case in every rapidly growing market, fy-by-night operations spurred up, trying to take advantage o this increasing demand and started ocusing on one thingonly: generating more and more revenue. In some cases, itwas no longer about connecting borrowers with the right

lenders. Dubious practices articially infated the lead poowith phony inormation and scammers, and good leadswere oversold. Lead quality, overall, plummeted.

I talk to a lot o mortgage proessionals in my line o work, and I hear much the same story rom a lot o them,“Internet leads are a waste o time,” they say. “Internetleads are spam. They don’t convert.” I have come acrosthree recurring reasons or the majority o this skepticism.

• Greedyvendors.Leadsaresoldtoomanytimes.By the time you, the lender, contacts the lead,teen other lenders have already called.

• Poorquality.Consumersareincentedtollout lead orms or all kinds o silly reasons (e.g.contests, sweepstakes, ...) and in some cases theorms have nothing to do with mortgages.

• Iftheleadhasdisconnectedhisorherphonebythetime you call or has given alse inormation out o suspicionwhich is well warranted these daysreund is unlikely rom the company you bought

the lead.I spent some time working with a ew o my mortgageriends to brainstorm and develop solutions to each o theseproblems. The answers we discovered are not necessarily revolutionary or brilliant. They just make sense. And wthink they might change the ways leads are bought andsold on the internet.

In order to be eective, leads must be generatedand sold through a platorm built on three principlestransparency, quality, and support.

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TRANSPARENCyI you knew teen other lenders had already called a

specic lead, you would not bother purchasing it. But themassive lead mills make their money by selling leads dozens o times to buyers who do not know any better. They withholdinormation about the status o the leads they sell, and in the

end, you are the one who ends up on the bad end o the deal.Transparency changes this. In a transparent system,

leads are bought and sold in an open marketplace where allbuyers are aware rom the start how many times a lead can bepurchased. Filters should be ree to applythe system wouldhardly be transparent otherwise. Inormation on when andwhere the lead was generated should be provided, as well asthe search terms that brought the borrower to the lead capturepage. This guarantees that the borrower is a recent “in-marketconsumer,” ready to buy, and not an internet spammer.

When leads are sold multiple times, it hurts everyoneinvolved, as well as the industry as a whole. Borrowers growirritated ater the rst ew lender calls and are not interestedin hearing the next oer, much less evaluating it critically. I you want to play this game, you are orced to degrade yourpitch into sound bytes and hype to snag whatever attentionyou can rom the uninterested borrower.

Our experience has shown that borrowers tend to

respond avorably to the rst three or our calls they receive.Ater all, they are shopping around. Any more than that andit gets overwhelming. This just makes sense. It isn’t rockscience.

QUALITyThe other hal o the equation is that the leads must,

in act, be worth purchasing. This means the leads must begenerated legitimately, through honest marketing practicesthat will bring in the right consumers.

The best platorm or lead generation is a healthy mixo organic search engine trac and targeted paid advertising.Organic search is one o the most trusted but complexinternet marketing methods to implement. A strongmarketing company will know how to leverage this tool todrive qualied trac to its landing pages.

To be truly eective, leads must be delivered in real-time; at the instant they are captured. Quality is highestwhen the lead is reshest. The system should provide lende

the opportunity to set lters and automatically receive leadsdirectly rom the landing pages that generate them as soon asthe orms are lled out. That’s powerul marketing.

SUPPORTAll o this would be meaningless without the ull support

o a reputable company to rest upon. When you call a lead,the borrower has only interacted with the marketing company or its website. As a result, the brand o the marketingcompany acts as an introduction and must be trusted andrecognizable. This is intangible support, something you cannot hire out to a lead management system.

Any dud leads must be returned without question asrapidly as possible. Ideally, the marketing company wouldhave a live customer support representative on sta to assistwith returns and process requests.

The leads you purchase must integrate with yourlead management sotware; no exceptions. I a marketingcompany tries to sell you their own proprietary leadmanagement sotware, that company has not done its job.

CONCLUSIONTransparency, quality, and support are the principles that

build a strong internet lead generation platorm. Anythingless is a waste o time. The internet has become the primary

resource consumers use to start the mortgage process. Withthe right leads, you can be there to meet them every time.

Rocky Foroutan is the CEO o Lender411.com, a rapidly growing online community or mortgage proessionals. Lender411oers an open and transparent platorm or generation and delivery o high quality real-time internet leads. Lender411.com also oerthe perect venue or marketing and advertising mortgage services.Basic membership on the site is ree. Rocky can be reached by [email protected] or by phone: 888-333-6628 x11.

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W hat makes a top-pro-ducing loan ocer? Is ittheir system, their lead

generation strategy, or is it somethingmore? I am oten asked by loan o-cers to give them the latest, greatest,and newest strategy that will propel

them to the top o their industry.What I have discovered is that there

are hundreds o ways to generate business and it is notthe strategy that works. It is the individual loan ocers’characteristics PLUS the strategy (in action) that producesthe results.

For example, i I am working with a loan ocer whohas little or no condence, there is not a system, plan, orstrategy that will put multiple loans in his or her pipeline.Thereore, it is not the “system” that this loan ocer needs,it is the condence rst, then the system.

As I have had the honor and pleasure o coaching andworking with originators all across the country, I have comeacross seven distinct characteristics o top producers thatI want to share with you. I also want to challenge you todecide where you are in each o these areas and make thedecision to improve any areas in which you all short.

1. COMMITMENTTop loan ocers have made a ull on commitment to

themselves, their amilies, and their industry. They have

decided that they are going to be the best they can andthey will simply make it happen. They understand thatthe road to success is paved with speed bumps, brokenpavement, and detours, but they have an unwavering spirito commitment that simply will not derail them rom theirgoal.

At the root o their commitment is their

understanding that building a business takes time, eort,and money. They are willing to invest all three.

Coach’s question: At what level is your commitment?

2. CONFIDENCEOnce a loan ocer has made a ull commitment,

he or she knows that their condence must match theirdesire. Condence comes rom two areas: 1) Knowledgeo the business, and 2) Experience. Top loan ocers spendtime studying their crat. They understand the businessboth rom the customer point o view as well as the largereconomic picture.

Once they have the knowledge, they will go into themarket and call on the best reerral partners. They acceptrejection as part o the learning process and work to perecttheir presentation and selling skills.

Condence comes and goes. When things do gowrong, deals all apart, or agents get mad they dig into theircondence vault o motivational messages and ll theirtank back up.

Coach’s question: At what level is your confdence?

by TIM DAvIS

CHARACTERISTICS OFTOP PRODUCING LOAN OFFICERS

Where do you stand?

14 February 2011



3. COMPETITIvENESSThe desire to win is what drives top loan ocers. They

absolutely hate losing a loan to a competitor. They get upeveryday with the single thought that they will originate a loantoday. It is an expectation that they will win. At the heart o their competitiveness is the secret they know: The Loan Ocerwith the biggest Database o Relationships,wins…period.

Loan ocers will review their numbers against theirpersonal goals on a regular basis and their internal drive willmotivate them to exceed their goals. Competitiveness is simply an inner desire to win.

I would personally write loans at times or little or nocommission because I did not want my competition to havethe deal. My ‘customer or lie’campaign generated reerralsand grew my business simply because I never let one get away.

Coach’s question: How competitive are you?

4. FOCUSOne thing I have denitely noticed is that top producers

are always thinking, “I must originate a loan,” while they are at work. They reuse to be distracted by “new” strategies,although they do take the time to investigate them. They havea written business plan that included no more than three activemarketing strategies. They become masters o their chosenmarketing strategy. They will not implement a strategy thatthey are not committed to making work or them.

They also understand their strengths and spend 80 percento their time working in these areas. They will outsource tasks

that are outside o their strength zone in order to stay ocused.Another area they ocus on is only working with the best

reerral partners. While they will accept business rom a variety o sources, they will spend the majority o their energy seekingout and building relationships with top agents who are like-minded.

Coach’s question: How is your ocus? Are you easily distracted?

5. INvESTMENTI have yet to meet a top-producing loan ocer that did

not invest in his or her business. They will invest their ownmoney into systems, coaching, and seminars that they willget a ROI rom. They do not squander money, but they dounderstand that without the nancial investment, they will notremain on the cutting edge o their business. They also do notwait or their company to make the investment. 99 percent o the time the money comes rom theirown pocketbook.

You will generally nd in their possession, mediacontaining interviews on best practices. Their desks will havesubscriptions to this magazine, and they will oten be ound atthe best industry seminars. I have also ound that they have, at

some point, invested money into hiring an assistant.

Lastly, they also schedule time to work on their business.

I know o one loan ocer who actually rented a hotel room

on the beach or a weekend to work on her business plan.

Coach’s question: I I looked at your checkbook ledger, how

many checks were written or investment in your business? 6. DISCIPLINE

Top-producers have a specic set o daily disciplines that

they implement consistently. From checking their e-mail, to

prospecting, and calling their database o clients, they have pre-

determined, specic times that they accomplish these task.

It is their persistence that pays o. They will stay with a

best practice until it delivers the results. Once they take on a

task, they will remain consistent in implementation.

They are also disciplined about amily and personal time

as well. Not every minute is spent on their business. They

will take 2-4 vacations per year and enjoy the ruits o the

business they have built.

Coach’s question: Do you have a daily discipline routine rom which you will not waiver?

7. ACTIONRegardless o the plan, top-loan ocers take action. The

industry, customers, and reerral partners are moving ast, so

they need to always stay ahead o the pack. Once they hear

about a strategy, they will quickly size it up, and then take

immediate, swit, and decisive action.

They will perect their strategy over time, because o their commitment. Everything does not have to be perect

and they understand that 80 percent is good enough when it

comes to getting started.

Coach’s question: How quick are you to take action?

In the end, the root o all o these characteristics is their

“why.” They have clearly dened and understand what they

want and why they want it. It could be their amily’s or

nancial security. Whatever it is, it drives these seven areas.

By taking the time to determine your why, you can begin

your climb to the top.

Tim Davis is a Mortgage Marketing and Sales Coach who works with loan ofcer and companies to increase their production, passion, and proftability. Davis is the host o The Originators Guide podcast on i-Tunes and you can fnd his video blogs at http://www.theorignatorsguide.com and http:// www.timdavisonline.com You can also ollow him on Twitter @timdavisonline or acebook at http://www.acebook.com/ timwdavis

TheNicheReport.com



The mortgage industry is un-

dergoing a complete renova-

tion. I you have ever tried to

live in a home that is being renovated,

you can appreciate just how dusty and inconvenient it can be. While

it certainly eels as though we are

working in a construction zone at the

moment, the ocus or Mortgage Loan

Originators have not changed; sales and production.

Operations have kept us up with the changes and the

new education requirements. Unless you can compete in

the marketplace to develop leads, all o this new ound

knowledge is in vain. So how do you eed the pipeline

with enough qualied leads to ensure that you are creat-

ing this a viable business model even with allout? Thisis the one answer that does not change with time: it is

the generation o leads! The enigma however, is how to

acquire them!

Lead generation does not happen overnight and is

really the culmination o a set o habits and behaviors

rather than a one-time action. In order to make the

changes necessary to eect new results, begin by writing

a plan. Ater all, as aptly stated by Lewis Carroll, “I you

don’t know where you are going, any road will get you

there.” Write down how many leads you obtain on a

monthly basis and the source o each lead. Also, write

down how much time you spend weekly on networking/lead generation activities. This is the beginning o a

roadmap that will enable you to chart your progress,

quantiying what works. Now, you need a comprehensive

list o ideas!

Websites are the number one tool used or

researching mortgages. Keeping on top o your website is

an absolute must, not a luxury, i you intend to compete

in today’s marketplace. This is the most daunting area

or many people as our knowledge has not kept up

with technology and we are apt to ignore and neglect

with what we are uncomortable. Fortunately, there aremany unemployed college kids around that would be

happy to help with this or a reasonable ee. You could

consider a monthly cost or 3-4 hours and certainly

improve upon your internet presence. Even i your

website does not need a complete overhaul, it probably

needs resh content to ensure that you are keeping up

with regulatory changes, this will also help to raise your

by JUSTINE ASSAL

TAkE My LEAD!

16 February 2011



prole on the web and make your site more visible. Try

not to panic over lack o computer knowledge as you

can learn the basic skills to update inormation, start a

blog, and connect to FaceBook and other social media.

In today’s market, your website is a bigger representation

o you than your oce building, but you must spend thetime helping borrowers to nd it. Sticking your head in

the sand is not the answer here as your website should be

actively catching leads and i not, it is a waste o the time

and money that you have already put into it. You can

also use website updates as an opportunity to reach out

to realtors and clients. Some template websites can make

this easy by oering packages that include email fyers.

I not, Constant Contact is always a great bet. Keep in

touch regularly with program changes, industry updates,

and get your website connected to as many realtor and

reerring partners as possible. This is time well spend anda true investment in your business plan.

While the Website might be a net to reach out to

potential borrowers, the rest is all about relationships!

It is, and always will be, the way that business is done

because ultimately, people are people and we all want to

work with those we eel comortable. The old adage “out

o sight, out o mind” also rings true and, thereore, you

must be out and about networking in business groups and

volunteering on committees. Always remember that your

competition, at least the successul ones, are out doing the

same. Committee work is not only important to be seen,but also to give potential reerring realtors and contacts the

opportunity to see your work ethic as a member o their

team. This is an invaluable way to generate leads, especially

i you are on committees within the local Realtor’s

association. Step up to the plate and oer your time and

knowledge; you will be surprised how well received your

oer o time will be.

Ultimately, all o this is about your image and being

seen. Frequency o contact and how oten you reach out

to “touch” your clients and realtors through email, phone

calls, personal contact and simply being out and about isimportant. I you imagine yoursel as a brand, you are in

complete control o the proessional image, relevance and

recognition o that brand. Visit real estate oces three to

ve times per week to speak at sales meetings. You should

also set aside time to work on an inormative email blast at

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least once every other week and update some text on your

website. Leads come to you because you are actively seeking

business and i you are spending your time in the oce and

not being visible on the internet and in your community,

it stands to reason that people will orget you and the leads

will dwindle down in numbers.As you start this process by writing your roadmap, you

need to keep a daily record o your calls, visits, internet

and social media touches, email campaigns and how many

leads are generated through each source over a three month

period. Ater the initial three month period, you will have

ample data to support what is generating the most amounts

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Wall Street reform &

ConSumer ProteCtion aCt

title X: Bureau of ConSumer

finanCial ProteCtion

by PETER HébERT

FINANCIAL STAbILITy OvERSIGHT COUNCILThe most noble o the titles within the Wall Street Reorm

and Consumer Protection Act is Title X, which establishes the

Bureau o Consumer Financial Protection.1

The Bureau is toplay a key role on the Financial Stability Oversight Council,which was established under Title IFinancial Stability, SubtitleA. This Council is the apex o the new regulatory apparatus. TheSecretary o the U.S. Department o the Treasury will serve as theCouncil’s Chairperson. The other members o that Council willinclude:

Chairman o the Federal Reserve Board o GovernorsDirector o the Comptroller o the Currency;Director o the Bureau o Consumer Financial Protection;Chairman o the Securities and Exchange Commission;Chairperson o the Federal Deposit Insurance Corporation;Chairperson o the Commodity Futures TradingCommission;Director o the Federal Housing Finance Agency;Chairman o the National Credit Union AdministrationBoard; and anIndependent Presidential appointee with insuranceexperience.

The Council has three overarching roles, which are to:

First, identiy risks to the nancial stability o the United

States that could arise rom the material nancial distress orailure, or ongoing activities, o large, inter-connected bank holding companies or nonbank nancial companies, or thatcould arise outside the nancial services marketplace;

Second, promote market discipline, by eliminatingexpectations on the part o shareholders, creditors, andcounter-parties o such companies that the Government willshield them rom losses in the event o ailure; and

Third, respond to emerging threats to the stability o theUnited States nancial system.2



bUREAU OF CONSUMER FINANCIAL PROTECTIONThe Bureau was the brainchild o Elizabeth Warren. On her

Facebook page Warren notes:

Consumers can’t buy a toaster that has a one in ve chance o bursting

into fames, but they can enter into a mortgage that has the same one

in ve chance o putting them out on the street.3

The Bureau’s mission, according to Warren, is “to levelthe playing eld or American amilies in the marketplace orconsumer nancial products and services.”4

Warren’s vision embraces the use o inormation technologyto achieve three organizational goals.5 First, to monitor, betransparent, and ward o industry capture. Second, to collectand analyze data with the ability to update inormation, spottrends, and deliver government services twenty-our hours a dayseven days a week as problems occur, not years later. Third, toexpand publicly available data so that more people can analyze

inormation, spot problems, and crat solutions.The Bureau will be unded and have an operating budget

o somewhere between $500 million and $646 million.6 TitleX is 160 pages long and has eight subtitles with 87 sections.The Bureau, or the most part, will serve as the single agency orcomplaints that otherwise would have been directed to the otheederal regulatory agencies.

STRUCTURE, GOvERNANCE, AND FUNCTIONSSection 1011 o Subtitle A establishes the Bureau o

Consumer Financial Protection to be overseen by a Director andDeputy Director. The President is responsible or nominating

the Director with the advise and consent o the Senate. Aterapproval, the Director will serve or a 5 year term. The Bureau’smain oce will be in Washington, D.C. and in the cities wherethe Federal Reserve has regional branches. Though it is labeled“an independent” agency and clearly established as autonomousrom both the Federal Reserve and Congress, the Bureau isembedded within the Federal Reserve.7 A healthy adversarialrelationship with the nancial sector is not yet apparent. Many o the Bureau’s roughly 2,000 employees will come rom theother ederal agencies that were stripped o their regulatory oversightthe same agencies that were 99 percent irrelevant.

These employees will all under the Federal Reserve’s retirementand thrit plans. The Bureau will appoint an Ombudsman toserve as a liaison between the public and the Bureau.8

The Bureau’s unctional areas will include research,community aairs, and collecting and tracking complaints. Thecomplaint section will be responsible or redirecting calls to stateregulators, reporting to Congress, and sharing data with otheregulators.9

The Director will establish an Oce o Fair Lending andEqual Opportunity to oversee and enorce the Equal CreditOpportunity Act and the Home Mortgage Disclosure Act.10



The Director will establish an Oce o FinancialEducation, “which shall be responsible or developing andimplementing initiatives intended to educate and empowerconsumers to make better inormed nancial decisions.”This oce will work with the Financial Literacy andEducation Commission, which was established under theFair and Accurate Credit Transactions Act o 2003 ollowingthe National Strategy or Financial Literacy that calls or:

Building public awareness o available resources;

Developing tailored, targeted materials anddissemination strategies;

Tapping into eective partnerships; and

Supporting research and evaluation o nancialeducation programs.11

The Oce o Financial Education will be responsibleor:

Financial counseling, including community-basednancial counseling;

Inormation to help consumer understand creditproducts, credit histories, and credit scores;

Savings, borrowing, and other services ound atmainstream nancial institutions;

Activities to help consumers understand educationalexpenses, nancial aid applications, major purchases,and debt reduction plans;

Help or consumers to develop long-term savingsplans; and

Wealth building and nancial services during thepreparation process to claim earned income tax creditsand Federal benets.12

SUPERvISORy AUTHORITyThe Bureau is empowered with exclusive supervisory

authority under Section 1025 o Subtitle BGeneralPowers o the Bureau. That oversight will be over very large banks, savings associations, credit unions, andtheir aliates that have over $10 billion in assets.13 The current regulators will have back up enorcementresponsibilities. Examples include:14

Bank o America–$2.8 trillion in assets.JPMorgan Chase & Co.–$2.175 trillion in assets.Citigroup Inc.–$1.9 trillion in assets.Wells Fargo & Co.– $1.3 trillion in assets.PNC Financial Services–$291 billion in assets.U.S. Bancorp–$266 billion in assets.Bank o New York Mellon Corp.–$237 billion inassets.SunTrust Banks Inc.–$189 billion in assets.State Street Corp.– $174 billion in assets.

Capital One Financial Corp.–$161 billion in assets.BB&T Corp.–$152 billion in assets.Regions Financial Corp.–$146 billion in assets.

Corner credit unions, typically with $200 million inassets, are not under the Bureau’s oversight. They did notcreate the nancial crisis, were not named in class actionlawsuits or predatory lending, and were not recipients o the Wall Street bailout.

The Bureau’s supervisory powers empoweredwith limited supervisory authority under Section 1026o Subtitle B concern nancial institutions with less than

$10 billion in assets. The institution’s existing regulatorsretain primary regulatory oversight and enorcementresponsibilities. The Bureau will have the ability torequest sample examination reports rom the primary regulators.

REGULATORy OvERSIGHTThe Bureau will have regulatory oversight over the majortransaction-related areas that include:15

Real Estate and Mortgage LendingReal Estate Settlement Procedures Act,Truth in Lending Act,Equal Credit Opportunity Act,Home Mortgage Disclosure Act,Home Ownership and Equity Protection Act,Home Owner’s Protection Act,Interstate Land Sales Full Disclosure Act,S.A.F.E. Mortgage Licensing Act; and

Billing and Debt CollectionsFair Credit Billing Act,



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Fair Credit Reporting Act,Fair Debt Collection Practices Act; and

Privacy and BankingFederal Deposit Insurance Act (limited sections),Fair Credit Reporting Act,

Gramm-Leach-Bliley Act (limited sections),Electronic Fund Transer Act,Truth in Savings Act, and theOmnibus Appropriations Act o 2009(only section 626).

The impact o this is that should the Bureau ail todeliver to protect consumers, only one ederal agency willbe blamed rather than all o them. The success o the newBureau, however, should be measured by whether or not itwill be able require credit card issuers to provide customerswith contracts in 12 point type that require both partiesto sign, without unilateral terms, and the opportunity orborrowers to have due process in the courts in the evento deault rather than the industry’s circumvention o theFith Amendment right to due process.

SOME OF THE AMENDMENTSSubtitle H is Conorming Amendments, and it

addresses amendments and adjustments to 28 regulatory,

licensing, credit, banking, lending, real estate, debtcollection, disclosure, telemarketing, and privacy laws.

Section 1083 o Subtitle H amends the AlternativeMortgage Transactions Parity Act o 1982 and overrules

“State constitution, law, or regulation that prohibitsan alternative mortgage ... including any restriction onprepayment penalties or late charges.”16

Under Section 1088 o Subtitle H that amends theFair Credit Reporting Act and Fair and Accurate Credit

Transactions Act o 2003, the Bureau will:

Establish and maintain guidelines or ... consumer reporting

agencies regarding the accuracy and integrity o the inormation

relating to consumers ... ; and prescribe regulations requiring

each [entity] that urnishes inormation to a consumer reporting

agency to establish reasonable policies and procedures or

implementing the guidelines .... 17

This amendment will standardize credit datamanagement and reporting.Section 1094 o Subtitle H amends the Home

Mortgage Disclosure Act o 1975, which will result ina change to the Uniorm Residential Loan Application

(Form 1003) to refect the number o and dollar amount o mortgages segmented by:

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Total points and ees paid at origination;

The dierence between the annual percentage rate andinterest rate benchmarks;

The terms in months or any prepayment penalty;

The property value;

The number o months in the initial xed rate’s term;

The presence o terms that would include other than aully amortizing term;

The loan’s term expressed as a number o months;

The origination channel expressed as either retail,broker, or other;

The loan originator’s unique identier per the S.A.F.E.Mortgage Licensing Act o 2008;

The real estate parcel number; and

The credit score o each applicant.18

The more complete nature o the data collection in theForm 1003 will better permit regulators and watch groupsto better understand the nature o both a lender and loanocer’s business patterns.

Section 1096 amends the Home Ownership and Equity Protection Act o 1994 and authorizes the Bureau as theprimary ederal regulator to develop, implement, and enorcerules that prohibit unair and deceptive trade practices.19

Section 1098 amends the Real Estate Settlement

Procedures Act o 1974 and recognizes the Bureau as theprimary ederal regulator to publish “a single, integrateddisclosure or mortgage loan transactions” in “readily understandable language” that incorporates the disclosurerequirements o the Real Estate Settlement Procedures Actand the Truth in Lending Act.20 The Bureau shall have thepower to administer and enorce these amended Acts.

Section 1100 amends the Secure and Fair Enorcementor Mortgage Licensing Act o 2008 to recognize the roleo the Bureau as a backup authority to establish a licensingsystem and to work in conjunction with the Board o Governors o the Federal Reserve System, the Oce o the Comptroller o the Currency, the National CreditUnion Administration, and the Federal Deposit InsuranceCorporation.

Section 1100C amends the Telemarketing andConsumer Fraud and Abuse Prevention Act to authorizethe Bureau to enorce the Act.

Section 1100F amends the Fair Credit Reporting Actto require creditors to provide applicants with their creditscore when an adverse decision is made.

yOU STRAy, yOU PAyConsumers can send their complaint to any o the

complaint processing centers o any o the agencies and itwill be orwarded by the receiving agency to the correctbanking agency supervising that lender. Similarly, loanocers looking to kick competitors to the curb or ailingto note the annual percentage rate when an interest rate ispromoted in a radio or printed advertisement will not needto know that lender’s regulator in order to le a complaint.The Bureau o Consumer Financial Protection will be thesingle source o contact.

Section 1017 o Subtitle A, the Bureau o ConsumerFinancial Protection, establishes and denes unding,penalties, and nes. This section establishes a VictimsRelie Fund, which provides the means to compensatevictims. When the Bureau secures a civil penalty againstlenders in judicial or administrative actions, payments wi

be made to the victims where money penalties exist underFederal consumer nancial laws.23

CHALLENGE TO NATIONAL CHARTERSAND THE SUPREME COURT

Unabated predatory lending in the United Statesin part hinged on the Watters v. Wachovia case. Linda

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Watters, Michigan’s commissioner o the Oce o Financialand Insurance Services, had the role o enorcing Michigan’stwo lending laws: the Secondary Mortgage Loan Act o 1981 and the Mortgage Brokers, Lenders, and ServicersLicensing Act o 1987. These laws required lenders doingbusiness in the state to register with the state and comply with its lending regulations.

Wachovia Mortgage had complied with Michigan’slending laws until January 1, 2003 when WachoviaMortgage became a subsidiary o Wachovia Bank, N.A.On April 3, 2003, Wachovia Mortgage notied Watters,and said it would no longer comply with the state’sregistration requirements, and stated that that it wouldcontinue originating mortgages in the state as it had orthe last six years. Both Wachovia the parent company and its state-chartered mortgage subsidiary believed thatthey were in alignment with the ederal law governing

national banks. Watters responded and said that WachoviaMortgage’s reusal to comply with state regulations wouldresult in the company not being authorized to originateloans in Michigan, in eect issuing a cease-and-desistorder.

Wachovia by virtue o its national charter, preemptedthe state’s regulatory reach, and as a result, the lendingpowers o a nationally charted bank and its subsidiariescould not be curtailed by state law. Moreover, theCommerce Power o Congress was not reserved as a stateright when it came to the regulation o subsidiaries o national banks.

The Supreme Court decided the case on April 17,2007, voted 5 to 3 in avor i Wachovia, and ruled that theOce o the Comptroller o the Currency had regulatory authority over operating subsidiaries o national banks thathave state charters. According to RealtyTrac®, one out o every 235 homes in Michigan was in oreclosure in 2010making that state the number three oreclosure hot spot inthe nation.

The Wall Street Reorm Act nibbles at, claries, butdoes not completely undercut, the Supreme Court decisiono April 17, 2007 in Watters v. Wachovia concerning the

doctrine o preemption, which was rooted in the TenthAmendment to the U.S. Constitution.24 That unpopulardecision was enough or the nation’s governors and attorneygenerals to hoist the Gadson fag with the “Don’t Tread onMe” motto up the fag pole. Section 1042, Preservationo Enorcement Powers States o Subtitle D, Preservationo State Law empowers the Attorney Generals to suenationally chartered banks in district or state courts to seek enorcement o any o the Bureau’s regulations. Section

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1044, State Law Preemption Standards or NationalBanks and Subsidiaries Claried, that “State consumernancial laws are preempted, only iapplication o aState consumer nancial law would have a discriminatory eect on national banks, in comparison with the eecto the law on a bank chartered by that State.” Moreover,

Section 1047, Visitorial Standards or National Banks andSavings Associations, opens the door to visitorial and lawenorcement powers by any state attorney general. Thestate attorneys general and state regulators are given theauthority to ully enorce their state’s consumer nanciallaws. Moreover, this title stipulates that state attorneysgeneral do have visitorial authorities to enorce statelaws on nationally chartered banks. The most signicanteature o this title is that it undercut the adverse impactthat Watters v. Wachovia had on the states.

THE SILENCE OF TITLE XFirst, Congress established the Federal Reserve

as a privately owned series o corporations owned by shareholders and member banks, authorized the FederalReserve to act as a ederal agency, and expected it toadminister and enorce regulations to protect consumers.The track record o the Federal Reserve has demonstrated

that the agency was over tasked, it underperormed, and itunder delivered. The creation o the Bureau o Consumer

Financial Protection or 201198 years ater the FederalReserve was createdunderscores the errors o having toomany PhD economists at the helm to manage “the dismalscience.” The Bureau o Consumer Financial Protection

will assume its statutory duties on July 21, 2011. The U.S.Department o the Treasury is charged with getting theBureau set up and can delay the Bureau’s assumption o

powers or six months.25 Second, understanding infation, not just the cost or

terms o credit, is central to consumer nancial protection.

Title X as well as Title XI (the Audit the Fed provision) aresilent on the money supply in the nation’s economy. OnMarch 23, 2006, the Federal Reserve stopped publishing

M3.26 By deemphasizing the role o the actual size o themoney supply, the true infation rate is concealed. Between1776 and 1983, the M3 money supply grew by $2.5

trillion. Between 1983 and 1997, the M3 money supply grew by another $2.5 trillion. Between 1997 and 2001, themoney supply again grew by $2.5 trillion.27

Mortgage lenders measure the health o their economy

by an interest rate and the abundance o mortgage



products. For them, “infation” will be measured in eecaps, which will necessitate more originations in orderto break even. The academic textbooks, however, use theConsumer Price Index promoted by Keynesian economistsas the measure o infation. Neither are helpul, becausetrue infation is measured by the supply o money in

circulation. So, the silence in Title X does not help lendersand consumers understand the relationship betweennance and economics when the legislative ocus is oninterest rates and ees rather than the number o dollars incirculation and what that does to costs over time.

Third, the emphasis on nancial literacy lacksdevelopment o a meaningul curriculum or the publicschools, colleges, and universities. In place o that, apriesthood o nancial counselors is created which will havethe consequence o creating another generation o in debtand dependent supplicants in parent-child relationships.

This will not solve the core problem o a widespread lack o nancial literacy. It addresses the need to provide seniorswith special attention to be protected rom unair anddeceptive lending practices, but the Wall Street Reorm andConsumer Protection Act exempted reverse mortgages.

REGULATORy MALFEASANCEIn the September 24, 2010 issue o the Federal

Registry, the Federal Reserve proposed amending a42 year old extended right o rescission provided by the Truth in Lending Act.28 The three year rescissionprovision has been used by homeowners, who have

discovered ater closing, that their lender had violated thelaw in the application process by not providing all o therequired disclosures. They discovered raud. Homeownersin oreclosures have used orensic loan audits to uncovermaterial disclosure violations in order to exercise theirextended right o rescission. When successul, this deenseagainst oreclosure orces the creditor to drop its security interest and its ability to oreclose. The homeowner thenrenances and pays o the outstanding loan balance

minus the payments made and nance charges and eesnanced at closing.

The signicance o the Federal Reserve’s proposalshould not be downplayed, because it erodes the provisionso the deense to oreclosure provision in Subtitle B o TitleXIV, the Mortgage Reorm and Anti-Predatory Lending

Act. The Federal Reserve’s proposal constitutes regulatory maleasance given that Section 1022 o Title X establishesthe Rule Making Authority under Subtitle BGeneralPowers o the Bureau.29

Not unlike the battle lines drawn in the ght that ledto Watters v. Wachovia, the Mortgage Bankers Associationleaned in avor o the Federal Reserve.30 In contrast,16 national consumer and civil rights organizations,33 state and local legal services programs, and 216attorneys regularly representing homeowners ghtingoreclosure opposed the proposal. In a joint letter to the

Federal Reserve, they asked that any proposed regulatory changes be made ater the Bureau assumes its statutory responsibilities on July 21, 2011.31

The Wall Street Reorm and Consumer ProtectionAct produced industry ears that Congress hadoverreacted to consumer demands or nancial reorm.Between July and December o 2010, 325 organizationsheld 510 meetings with the Federal Reserve, the FederalDeposit Insurance Corporation, the Securities andExchange Commission, and the Commodity FuturesTrading Commission. In this lobbying eort to preemptthe Bureau o Consumer Financial Protection, 90 percent

were banks concerned about risk-retention requirements,raud prevention, debit card ees, merchant ees, andnotices o ees and exchange rates or consumers.Industry ears ocused on the cost o compliance, not theintended benet to the consumer.

Peter Hébert is a mortgage fnance and real estate industry subject-matter expert and CEC trainer with a master o business administration degree in fnance and marketing rom Mount St. Mary's

University in Emmitsburg, Maryland.Hébert is the author o Mortgaged and Armed (Freedom House Press, July 2010), which is available on Amazon.com. His upcoming books are The Collapse o Home Prices and the Foreclosure Crisis and Predator Nation.Both will be available in 2011. He can be reached at [email protected].

* Endnotes to this article will appear in the online version o The NicheReport, which can be ound at www.thenichereport.com ater Feb. 15th.



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is very popular with real estate agents.)

A Facebook business page can be used eectively with

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Assuming you already have a Facebook personal prole

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To do that, type “Facebook Pages” in the search eld on

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Ater creating your business page, write a ew interesting

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let-hand column o your Home Page), post a photo, and add

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It’s important to engage your audience with insightul,

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(Facebook terms) end up in more eeds, which means greaterexposure. It’s also important to maintain a regular cadence

by posting at least once a day.

The next step is to build a base o “ans” by inviting

your Facebook riends to “Like” your page or regular local

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benet by guring out how to use these platorms to their

advantage.

Maintaining a Social Media presence takes time. Tools

like Twitter, LinkedIn, and Facebook, should be usedconsistently to be eective. I you have the time and/or

sta to manage multiple Social Media platorms, go or

it. I not, consider ocusing on one or two and doing that

well.

Facebook is becoming the rst choice o many

businesses because o its size (more than 500 million users),

the SEO benets o a business Facebook page, and the

"wall" where they can converse with customers. (Facebook

by CATHy bLASzyk

TIPS FOR LOAN ORIGINATORSTO GENERATE MORE LEADS

30 February 2011



managingin the brave new worldof mortgage financemarch 15 - 17, 2011trump taj mahal, atlantic city, nj

residential program at-a-glance

tuesday, march 15, 2011 Opening Networking Cocktail Reception in the Exhibit Hall

wednesday, march 16, 2011General Session Topics• The Future of the Securitization Market, Risk Retention, TBA Market,

Reforming the GSE’s, Government Guarantees & More• MBA’s Report on Current Legislative/Regulatory Issues• Banks in the Mortgage Market• How to Use Social Networking:

Facebook, Twitter, LO Websites, Blogs

Exhibit Hall with Lunch

Afternoon Session Topics• LO & Broker Compensation• Labor Law Issues (LO Overtime, Department Of Labor Opinion,

Minimum Wage)

Mortgage Bankers & Financial Institutions Panel: Independent MortgageBankers Mortgage Brokers (FHA Business, Use Of Compare Ratio’s, Etc.)

Regulators Roundtable: Regulators from NJ, PA & NY

Mortgage Fraud Panel: How To Detect And Avoid Mortgage Fraud

Networking Cocktail Reception

thursday, march 17, 2011 Critical Issues Day

• An in Depth Look at Financial Regulatory Reform• LO Compensation• Risk Retention• Ability To Repay • CFPB Regulations• Fed Reserve Rules• SAFE Act And Related Issues

MI’s: Future Of The Private MI Industry

Residential Mortgage Lending For Financial Institutions• Subsidiary vs. Division• Registration of LO’s• Obtaining HUD Approval• Investor Approvals• Underwriting

A View From The Regulators: OCC, FDIC, State Reg

commercial property program will run concurrent with the residentialprogram for more information visit www.mbanj.com

2011regional

conferenceof

mbas

t



Continue to update the page with resh content.

Topical ideas can come rom many sources. For example,

go to Google News (www.news.google.com) and search

or a topic that would appeal to your readers, or example,

“Mortgage Rates.” You will nd links to the most recent

news items or that term. Scroll to the bottom o the pageand select “Create an E-mail Alert or Mortgage Rates.”

You will then receive daily or weekly updates o resh news

items that you can post on your page or add with your own

comments.

Other sources or content:

• IndustrytradeassociationWebsites

• Industrypublications

• Realestatepublications

• Nationalnewspapers

• Localnewspapersinyourarea• Chamberofcommercenewsletters

• Realestateblogs

TIP #2: bLOG. LEARN TO DO IT EFFECTIvELy.Be yoursel. Read blogs you like and nd a tone

that you are comortable with. Write as i you are having

a conversation with a client or colleague. I you are

producing content or your Facebook page, it shouldn’t

be too dicult to expand that into blog posts. I you are

already blogging, make sure you are doing it consistently,

at least once a week.Focus on trends, statistics, local market inormation,

new products and services, and anything else you think

would be o interest to your readers. Talk about real lie

situations that have occurred in your business. Provide your

opinions on the housing market nationally and/or locally.

Comment on related news articles you’ve read. What’s going

on with lending? What new products are out there? What’s

happening with loan modications?

Be sure to link your blogs to your Facebook page and

your Web site (plus additional Social Media or other sites

you use such as Twitter). Include your e-mail address

and invite people to ask questions. Publish questions and

answers in uture blogs.TIP #3: GET ENDORSED. LEvERAGE yOUR SATISCUSTOMERS.

Turn satised customers into boosters. Here are

some o the tactics you can use with your customers:

• Invitethemtobecomea“fan”onyourFacebook

page so you can keep them up to date.

• Askthemto“Like”yourFacebookpage,thereby

recommending it to others.

• Askthemtowriteatwo-orthree-sentence

testimonial and post it on your Web site andFacebook page (with their permission).

TIP #4: GET PERSONAL. bUILD MORE FACE-TO-FRELATIONSHIPS.

Enough about Social Media. Don’t lose touch with

people ace-to-ace. Much o your business can come

rom people who know you.

Get involved by joining your local Realtor®

organization as an aliate or associate member.

Attend the events and unctions. Volunteer to serve

on committees that are allowed or your membership

category. Get to know people. Attend real estate caravans

and open houses. Establish your credibility by becoming

amiliar with your local market, such as inventory, trends,

what’s selling or how much.

Reach consumers by becoming involved in

community groups like the chamber o commerce, Rotary,

Boys and Girls Club, etc.

Remember, relationship building takes time. Get to

know people and build their trust in you. They may seek

you out or advice and, eventually or business.

TIP #5: LOOk SMART. POSITION yOURSELF AS AEXPERT IN yOUR COMMUNITy.Look or other avenues to gain exposure in your local

market and position yoursel as an expert.

Contact your local newspaper and oer to write a

bylined article on a topic related to your eld that educates

consumers. (Weeklies are more receptive than major

metropolitan dailies.) Don’t advertise yourselyour

exposure comes in the orm o your byline and bio at the

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end o the article.

Once you establish yoursel with your local

newspaper, oer to write a regular column or Q&A where

readers are encouraged to send questions.

Connect with people on real estate and consumer

Web sites that post consumer questions. Focus on thosepertaining to your area o expertise in your community

(don’t waste time advising someone who lives on the

other side o the country). Oer your expertise where

appropriate. Some examples:

Active Rain: An active social network that helps real

estate agents create business relationships both within the

industry and with consumers. Ater registering, click your

state at the top o the page, and then click on your city or

county rom the list on the let-hand column.

Review the blogs and posts. You can post a link to

your blogs, updates on new services you provide thatare helpul or your customers, or your opinion about

something happening in your community that pertains

to housing. Registering and using many o the eatures

are ree, with more advanced tools and benets available

on a paid subscription basis. (Note: You do not have

to write new blogs or every site. With a ew tweaks,

blogs can be used on several sites, getting a bigger bang

or your buck. Just be sure your content matches your

audience.)

YELP: A consumer-oriented site that helps people

nd customer ratings or local businesses. Ater registering,navigate to your local city or county, then to the Real

Estate tab, and the Mortgage Broker category. Ask ormer

clients to post a review about your services. Monitor

questions/posts related to mortgages and respond to those

where you can be helpul.

Zillow: Respond to consumer questions under

the “Advice” section at the top o the page. Once you

are in that section, type “Mortgage” in the “Questions,

Keywords or Topics” search box, ollowed by your city in

the next search box. There you will see a list o questions

and the dates they were posted so that you can respond to

those you eel are appropriate based on relevancy and how

recently the question was posted.

SUMMARyWith the prolieration o Social Media and

inormational Web sites there is a deluge o inormation

competing or attention. But there are also more ways

to reach your customers i you rise above the “noise” by

providing content that is relevant, inormative, and topical.

Be concise and keep blogs short (300-400 words should do

it). Don’t orce people to wade through a long post to get

to the heart o your message. Build your Web presence and

expand your personal relationships. Oer to help people as

opposed to promoting yoursel. Building relationships andestablishing yoursel happens over time. Be patient, consisten

and persistent.

Cathy Blaszyk, CMPS, RMA, is Vice President o Lender

Services or ClosingCorp, a real estate inormation and data

services company based in La Jolla, CA. ClosingCorp develops

Web products to serve the needs o real estate proessionals and

consumers, including the SmartClosing Mortgage Calculator,

the SmartGFE Service or loan originators and Closing.

com. Blaszyk has spent two decades in the mortgage banking

industry, representing direct lenders such as Bank o America and

CitiMortgage, as well as serving as a mortgage broker.



www.alamode.com/Niche to download the packet.

Go download the packet o ree templates and tools

now. We all know that even when we think the industry

has dried up like a salty slug at the hands o a mischievous

8-year-old boy, top producing agents are still selling homes.

Even in the toughest markets, the best agents have enough

qualied buyers to make you very successul. Even better,

we’re hearing that things are improving every day, so now’s

the time to solidiy your relationships so you’re reaping therewards in the coming spring selling season.

7 MODERN wAyS TO wIN MORE REFERRALSUp ront, this isn’t going to be a boring rundown o

the basics. You’ve been to plenty o industry events, happy

hours, chamber mixers, and the like. You already know how

to do that. Tese ideas are resh, or new twists on classics,

that’ll help you get in good with only the best agents.

1. Teir benet + how you’re diferent = sweet success

Just like you’re bombarded by people wanting your

business, agents hear rom multiple loan ocers every day.And the superstar agents are ooded with calls and marketing

rom LOs. Using a little empathy when approaching agents

can go a long way. Now, this doesn’t mean bowing to their

eet in servitude, but start thinking about your answer to

their inevitable question, “What’s in it or me?” You know

exactly what you hope to gain. Now, turn it around. Wha

can an agent or REALOR® gain rom working with you?

Let’s be real here: the agent doesn’t care about your gain, so

In the October 2010 issue o The

Niche Report, my colleague,

Molly Dowdy, wrote an article

entitled “9 Steps to Landing Agent

Reerrals.” We were fooded with

great eedback, so we thought a ollow

up with more ideas was in order.

wHy IS EvERyONE AFTER AGENTREFERRALS NOw?Many agents have buyers who have allen in love with a

house, but haven’t secured nancing and some agents have

a strong preerence or pre qualied buyers when showing.

Either way, partnerships with successul agents ensure that

you’ll have a constant ow o eager borrowers.

First, as we mentioned in October’s article, we wanted

to point out again that it’s important to have a specic

group o agents that you target, and save your eort or

those people. I you have limited resources, ocus on those

who are generating great income. By approaching only thestrongest agents, you’ll see that you’ll get responses rom

those who are open to power partnerships. I you give

them their due, they’ll show interest in working with you.

DON’T wORRy, wE’vE GOT A MARkETING CHEAT SHEETWe know not every LO has access to a never-ending

penny bank when it comes to marketing. So as usual, we’ve

put together a web page with an easy-to-ollow marketing

toolkit you can download or ree. You can hop over to

by LakRISHIA ARMOUR

SEvEN NEw IDEAS FOR wINNINGAGENT REFERRALS

34 February 2011



tell them what’s in it or HEM immediately. Keeping this at

the oreront o your marketing and at the very beginning o your

conversations is critical.

Afer you’ve told them what’s in it or them, tell them

how you’re dierent rom the rest. I you’ve ever wished you

knew just what to say to an agent to get their attention, try thisormula: Teir benet + How you’re dierent. It’s a powerul

one, two punch combo that will get their attention.

2. At open houses, leave them something that won’t get

trashed

Instead o leaving a boring stack o business cards or yers

at open houses, give them glossy plastic-coated cards that

give answers to requently asked questions about loans and

nancing, and/or a short glossary o requently misunderstood

nancing terms, along with your contact inormation. You can

use questions that you actually hear rom borrowers on a daily

basis or cruise the web or ideas. Tis gives potential borrowerssomething they can take along with them as a reerence guide.

And, they’re ar more likely to pass it to their riends and

amily, too. Tink about using QR codes so that they always

have your contact ino on hand.

In the downloadable toolkit I mentioned earlier, I’ll

include a template or an FAQ collateral piece, plus pricing and

contact ino or the plastic-coated printing best suited or this

kind o project. It’s ar cheaper than you think, I promise. And

remember, as a bonus, these more proessional and inormative

leave-behinds also make the agent look good because they’re

providing important guidance instead o just random business

cards. So you’ll be getting the attention o prospective borrowers

and the agent. wo birds with one plastic coated card.

3. Pay your debts and make sure they know you did it

Are you on the path to orming a great relationship with an

agent? In order or a productive partnership to blossom, you’ve

got to nurture it. In the November article, Molly mentioned how

important it is to thank an agent or their reerral. But let’s also

take it a step urther and reciprocate the lead. Warning: Don’t

just tell the buyer to tell the agent that you sent them. Tat’s not

enough. Te buyer will likely orget. Instead, afer you give youragent’s contact ino to the client, give your agent a heads up that

you’ve sent a reerral their way. And, don’t orget the reerral’s

contact ino so your agent can do a proactive ollow-up. Be very

clear by saying, “Remember when you sent Mike Jones to me or

a loan on the Magnolia property? Well, I came across a potential

buyer or you and wanted to return the avor. Here’s their

contact ino and I gave them yours, too. Tey’re expecting your

call and I told them great things about you. Let me know how

it goes!” Te key is to be transparent with your actions.

the marketing kit, we’ve got a couple o sample e-mails you

can send out to your agent partners when you introduce a

reerral.

4. Niche-ing yoursel is so three years ago – niche your

targets instead We all know the market is generally too tight to

pigeonhole your brand into one specialization like reverse

mortgages, jumbo loans, rst time buyers, etc. A ew yea

ago, you could make a good living doing just that, but now

you need to wear more hats. But how can you cover mor

ground without ading into the crowd?

First, orget the rate sheet. It’s a necessity and you

can do it automatically and easily. Everyone sends one, so

it’s not going to be enough to make you stand out in the

stacks o other rate sheets axed to brokerages. ry the

ollowing two ideas instead.a) Deliver a ew pieces o strategic loan program

inormation to targeted brokerages and agents. For

example, when you nd a great loan program or special

rates or military, present that relevant inormation to

oces and agents located around military bases. Find

an aordable down payment program? arget the rst

time buyer agents with that material. Got a good jumbo

loan option? Hit the agents that specialize in luxury

homes. I you have a good automated e-mail program th

categorizes your contacts (XSellerate does this), it will be

very easy to get sophisticated with your messaging or a

much higher return.

b) Check out a daily rate advice program like

XSellerate’s Daily Rate Lock Advisory. Instead o just

rates, it has expert commentary and advice on when to

lock and when to oat. Tere’s an update every single da

so you can send it to agents daily or you could opt to send

it weekly instead. But, these advisories are e-mailed to

your contacts with your branding on them. Te advice is

proessional and would take you signicant time to do on

your own, but this is automated and you don’t lif a nger.It’s one o our avorite things – looking like a rock star

without actually doing anything.

5. Use the B word

No, not that B word. Blogging. I know, I know!

Blogging was a buzzword a ew years ago, but hear me

out beore you skip this paragraph. Blogging is a great

way to share your expertise and gain search engine rank.

Plus, most o you probably have blogs oating on the web,

TheNicheReport.com



untouched or years. Consider restarting it, but with a new

strategic, very specic twist. Instead o the general purpose

mortgage nance blog, write one specically FOR AGENS.

Fill it with tips or avoiding pitalls, creative ideas you’ve

heard rom other agents, other LOs, and inormation about

nancing in your area they can’t get anywhere else. I yourblog has your unique expertise that will help them make more

money, they’ll read it. No u – just unique inormation

that will help them make more money. You’ll need to post to

your blog at least once a week, but it’s not hard to do i your

website has an easy built-in blogging tool. And, keep in mind

that Facebook, or any other social network, is a great way

to promote your posts. Don’t worry – in the downloadable

resource kit, we’ve listed enough topic ideas to keep your blog

or agents ull o interesting, keyword-rich content or six

months.

6. Use technology to make them look good I you have technology solutions or specic sets o

borrowers, make sure agents know about this. It’s another

one o those things that you can do behind the scenes that

makes the agent look top-notch to their clients and gives

them an incentive (their gain, remember) to send more

reerrals your way. For example, i you’re using SureDocs

or any other e-Signature sofware, you can help agents close

more relocation deals and close them aster and with better

client service because borrowers can sign remotely and

securely. Let your agent contacts know you’ve got the tools

to make their job easier and make them look like Earth’sgreatest agent, and you’ll answer that “what’s in it or me”

question.

7. Get crazy creative

So, this one costs you a little bit o cash, but the

investment compared to the return makes it a no-brainer.

Find a product that agents use and brand it. See a tape

measure keychain you like? Slap your logo on it, too. Ni

little camera case? Slap your logo on it. Tese are things

that actually get used by agents. And, we’ve added the

contact ino or a ew places you can order rom in the

toolkit.

But, i you want more o a kick, pick a promotional itemthat seems o base. My idea is a kitty litter scooper with th

tagline “aking the crap out o mortgage loans since 1999.”

Something this creative will denitely take on a lie o its

own as people pass it around the oce and email pictures

o it to riends. And that exposure is just what you need to

make yoursel stand out in the crowd o hungry LOs.

Tere are some great tips here, but in order or them

to work, you’ve got to be ready to back up all this talk.

Tat means you’ve branded yoursel accordingly with

a proessional website, and most importantly – world

class service. When you use these ideas, you’re going

to see results. And, i you’re not ully prepared to build

partnerships or ready to handle the agent reerrals you’re

going to get, you’ll denitely nd yoursel carrying an

obscenely bad rep beore you even have a chance to get

started. Not good…at all. So, make sure you’ve got the

basics taken care o beore you orm important partnerships.

Use the tips here and the ideas in the marketing

toolkit as added arsenal to your closet o marketing tricks.

From inormation-based advertising, to oering relevant

technology that closes dicult deals, to very memorableleave-behinds, you’ve got plenty o ingredients to get

started. Go easy at rst, or jump right into the big stu,

but get up and do something. No doubt you’ll start plenty

o mutually benecial money-making partnerships with

successul agents in your area that will ood you with

enough reerrals to keep you busy.

Don’t orget the ree templates at www.alamode.com/

Niche and don’t orget to send us your eedback – we love to

hear rom you.

Armour is a marketing content specialist or a la mode.

She produces advertising content in XSellerate, a la mode’s

automatic marketing product or mortgage proessionals,

including campaigns or agent reerrals. Since 2005, mortgage

pros have sent over 73 million e-mails rom XSellerate, and

the product has generated an average o 40% more leads or

Mortgage XSite clients using it. Armour can be reached at

[email protected] or 1-800-ALAMODE.



W e used to love loan ocers.When volume is high andpipelines are plush, it is easy

to applaud the talent o the sales sta.When volume dips, the sales sta getsblamed. The role o the sales proessionalis a thankless job. The expectation isalways positive with little room or things

to drop o. In the perception o the consumer, there is only one thing worse than a loan ocer, and that is a mortgagebroker. It is clear that the legislation in 2009 and 2010were aimed at Mortgage Brokers, and or the most part, thisdismantled this market segment to less than 10 percent o all loan origination volume in 2010 ($1.4B). 2011’s ocusis not on the mortgage broker as much as it is on the loanocer. It is worth noting, the Broker however is not o thehook. With the end o the mini Eagle, increased net worthrequirements, and the ever increasing number o disclosure

requirements, the broker’s role is being siphoned o. Withcontinued broker attrition estimated at around 10-15 percentby Access Mortgage Research (http://www.accessmrc.com/),the eects o the 2009 regulatory conditions are continuingto take their toll on this segment. (Writer’s note: It is worthnoting, opinions vary regarding the uture o the mortgagebroker. Estimates are conservative around 10 percent tomore aggressive at a 20-25 percent drop o in the numbero licensed broker. As has been written in several precedingarticles, my orecasts have brokers losing signicant ground

to ewer than 10,000 licensees. This, in my estimation, isanother 25 -28 percent through 2011).

With the ABA and the banking lobby as powerul as they are in DC, loan ocers or non-depository institutions arebeing brought to the wood shed by their elder brothers, orthe ‘real bankers’ as they like to call themselves. This irony isclear or anyone who understands the cash fow and revenues

or a depository with a growing mortgage division. As they watched mortgage brokers and mortgage bankers expandhighly protable businesses, the very service and productinstruments they heavily criticized between 2004-2007 (e.g.Mortgage lending by non-depositories) are now the largest andmost protable departments to many o the same banks. In

my M&A work with Depositories and Mortgage Operations,it is not uncommon to realize a 10:1 gain on revenues romyour mortgage division versus traditional income channelsrom within the ‘bank.’ The mortgage division is a cashcow or depositories and even more so, a margin gain or the

ollowing reasons: Traditional compensation sales structuresor their sales sta; little cost to Marketing and a very low Costo Sales. What made working or a depository institutionunattractive was a $35,000 year job with little commissionableearning potential. Now that non-depository mortgage lendinmakes up less than 20 percent o lending volume, and urther

regulatory constraints leave depository institutions exempt(e.g. licensing) rom administrative burdens, the market (andits margins) is being pushed toward this poorly compensatedculture o lending. Why pay sales people more than is

2011 THE LOvE AFFAIR IS OvERNow that the Fed has gotten rid o the Mortgage Broker,

the Loan Ocer is next.

by RICk ROQUE

TECHSPOT

TheNicheReport.com



needed when you have sizable base o customers? Well, the newcompensation rules eectively ollow HUD’s recommendationin December o 2009 regarding Loan Ocer Compensationto pay them hourly or a salary like most employees in a bank.It is clear bringing loan ocer’s compensation into alignmentis clearly the agenda, just how much will depend on uture

modications and/or amendments to Dodd-Frank.

CHANGES IN COMPENSATION IMPACTSTECHNOLOGy vENDORS

The impact on compensation trickles down the industry.It is not just the mortgage operation that is impacted but thetechnology vendor. Occasionally, I will receive emails romtechnology executives saying, “Rick, you spend a lot o time onmarket dynamics and not enough time on technology.” My response to this is clear: technology vendors do not understandthe intricacies o how to do a mortgage. An understandingo the market, leads the technologist to prioritize, and even

orecast, what the technical priorities need to be, then toleverage current and uture technologies to meet those needs.However, there is a capital crisis in mortgage technology.Thereore, it will be a test o time and investor patience to see i the undercapitalized or under perorming companies have thestaying power to make a dierence. For as long as the mortgage

industry continues in its lulls and the economy at large remainsuncertain, investor condence in mortgage technology is goingto remain fat. In my prediction, it will not peak interest untilthe market grows back to $2.0T (over 10M units). To suan increase o nearly 4,000,000 mortgages, there needs to bestable and sustainable (and gradual) economic growth on the

supply side (stable job creation, low unemployment etc) and arise in the international appetite or mortgage back securities.This may take 4 or more years o steady job growth and let’shope so – my oldest will be looking at colleges and given therate o college tuition, I think I will need this assumed economicgrowth.

The point is the ollowing: real disruptive innovationin mortgage technology that has a meaningul impact (interms o market adoption) is several years away. Brad Eatonrom A la Mode (www.alamode.com) wrote a great articleregarding the 10 year anniversary o ESIGN; 10 years!? Realinnovation takes time in any industry but especially in bankingwhen most practices are at least 6-8 years behind mainstreamadoptive consumer driven technologies. (Ex. When I gomy Master’s degree in Technology Management, I esigned ormy student loans back in 1999) Today, a student esigns onwhat oten amounts to be over $220,000 worth o studentdebt, right around the national average or a home. So why is this so dicult? It is about capital, market sizing andmarket incentives. It will not be until all three converge wheninnovative change takes its hold on mortgage technology. Theare examples o a ew mortgage technology rms who meetthese three market opportunities, but most do not. Your job

in the mortgage rm is to careully select who they are and it isrom people like me and others, who help rms accomplish thisWhat does this have to do with compensation changes in

2011? A great deal. Technology rms are scrambling to comup with a fexible enough ramework to accommodate thisimportant mandate. In the rst Quarter, we will have sometools available to manage commissions however much o thiswill depend upon the resources o the tech rm. When techrms are conronted with this – they sell: what they have, or tvision o what they will have.

TECHS

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TECHSPOT

2011 TECH TRENDS TAkING SHAPE: 7 STRATEGIES FORTHE SUCCESSFUL MORTGAGE COMPANy

There are several interesting trends taking shape already

in 2011 mortgage origination. Mortgage companies arepanicked to adjust their operation rom ocusing on renanceand streamlines to new purchase originations. The ocus (again)

is retail, new purchase business. Several Wholesale Operationsare converting their A.E.s to ocus on retail recruiting. With

the wholesale channel in serious decline, their only chance tomaintain volume is to grow their own native retail channel. Theindustry is being orced to cannibalize itsel and its volume. Thecompetition will not be easy and or those mortgage companieswho think it will be are mistaken. The Federal Governmentslowed down the Housing / Mortgage industries to the lowest

point nearly 12 years. As Jacob Ganey recently wrote, “thewestern regulation may kill everything in mortgage nance thebailout tried to stimulate.” This is an interesting point. Bankingis largely about managing risk and making (or losing) a great dealo money on managing this risk correctly. The ederal and state

regulatory trends have attempted to dissipate the risk in mortgagelending and as a result, demand declined erasing nearly a 12yearso production growth. As I indicated in December’s issue, we areat 1997 / 1998 levels o mortgage production. With the prospecto another 30 percent decline in mortgage origination (across allchannels), this reality, albeit slowly is sending shock waves across

mortgage banking and brokerage rms across the country.One large Mortgage Lender who closed a company record

setting month o over $500M in November o 2010 met thismark with a celebratory ear since over 60% o this volume

was renance business. On one hand they are preparing theirorganization (and setting expectations with the board) toreturn to $300M levels in 2011, and attempting to come upwith creative strategies to gain market share in 2011. So tohelp, here is the 2011 roadmap or the successul mortgageoperation. I outlined the key points or the mortgage executiveand the corresponding questions or technology they should be

asking. They are:1. Cost Reduction - Production costs must be below 50-

60bps on every loan- how can your use o technology eliminatecycle times, compliance costs and manual touch points on thele? Ultimately this will mean head count reduction and the

need to reduce your sta by 10-20 percent.2. Minimize physical le touch points – this is worth

a separate bullet; does your technology automate your process?Is there ‘hands o’ quality and compliance controls andverications?

3. Centralize all o your inormation as soon aspossible - Manage, Report and customize this inormation inthe most fexible LOS solution you can aord. Technology,Automation and stability o the company are key actors in



selecting a vendor. Has the company been around or longer

than 5 years and has more than 1,000 clients? Can the vendor

aord to lose 30-40% o their clients as many mortgage

companies will lose 30% o volume? I the company has

been around, have they struggled to innovate? What is their

reputation? Have they lost market share?

4. Invest in a Compliance Ofcer and a Chie Inormation Ofcer - The right people in these roles are vital to

the growth and success o your mortgage operation. The Chie

Inormation Oce is not a ‘techie’ but a technologist; one who

can match key operational goals with the right technologies

available in the marketplace. The key is the planning and

execution o these solutions internally in order to realize

these goals. I am always surprised at the number o mortgage

operations who originate $70M-$120M/month who do not

have either o these positions lled; yes this is true! It is amazin

and it is prevalent.

5. Remove Overlays: 2011 is the rise o subprime-With volume declining and mortgage companies embracing

compliance driven technologies, there is growing appetite

to lend to 580 or 600 borrowers. Why not? The average o

FICO o the American Consumer is below a 640. There are

many borrowers with stable employment, who pay their bills

but have a low FICO because o a catastrophic event (e.g.

divorce, short sales, negative equity etc). 2011 and 2012 is

the year or these borrowers to buy a home. Those who have

good credit have already purchased and renance (as a national

trend) their home; so now, it is time we open up the products

in a responsible manner in order to assist in the eligibility and

options o consumers.6. Consumer Direct - Go consumer direct; it is critical to

get to the consumer rst beore your competitor does. My go

in working with mortgage companies is to get them to get to the

consumer beore the consumer goes to the real estate agent. T

goal or the mortgage company is to be the reerral source to

the Real Estate agent and not the other way around. There are

a number o ways to accomplish this and I will write about this

in uture articles. What technologies build a relationship that

transcends the mortgage transaction between the loan ocer,

your organization and the consumer?

7. Lending Centers - Focus on 10-15 lending centersin key markets around the country. Grow those operations

organically. It is much easier to grow 10 lending centers to

$50M/month than it is to grow 300 branches that are largely

let to themselves or their growth.

Rick Roque, ormer Management Team member at Calyx Sotware & non-operating owner o Menlo Company. I you havany comments on this article, eel ree to call Rick at 408.914.5895or by email: [email protected]

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cheaper and aster, why, oh why, are you willing to make a

mortgage nancing decision based on an appraisal report

that was produced by an appraiser who would take the

cheapest ee and produce the astest turn time? Remembe

when your mom taught you that you get what you pay or?

Apparently, large lending institutions have orgotten

this very important lesson. Amazingly, they have all hadthis memory lapse in spite o being in the atermath o a

huge historic gut punch resulting rom the consequences o

“you get what you pay or.”

Remember the days o 100-120 percent loans with

no money down and stated income? What did we get or

that? What we got was a bunch o homeowners with no

equity stake in a home that they could not pay or, who

willingly walked away and deaulted on their cheap and

easy loans! That’s what we got.

So, I ask you, what are you getting when you insist on

the cheapest and astest appraisal product? Beore I give yomy “appraiser biased” answer, let’s look at the numbers.

Last year, one o the largest Appraisal Management

Companies sent out a notication to their appraiser

contractors stating that 67 percent o appraisals perormed

by those contractors were being returned as decient.

SIXTY-SEVEN PERCENT! I only 33percent o reports

pass muster, that is a ailing grade in the real world! The

unortunate reality is that this large AMC notoriously

Y ou must be sitting therethinking, “Uh oh, anotherappraiser has gone completely

o the deep end. Look at the titleo this article!” Well, you mightbe right. I actually may have gone

o the deep end but beore I resignmysel to that conclusion, let meexplain.

First o all, who doesn’t love spaghetti? Ater all it’spasta, it’s comort ood. Don’t we all have memories o big spaghetti dinners with the amily and isn’t a spaghettieed one o the more popular und raising events or yourchild’s sports team, the neighborhood association or youravorite church? Heck yeah! We all love spaghetti. But,would you love spaghetti i it was covered with Friskiesfavored spaghetti sauce?

Now, beore you answer, consider these acts: Friskiesfavored spaghetti sauce can be made in hal the time o your mom’s avorite spaghetti sauce; all you do is open thecan, dump the Friskies in the pan, add tomato sauce andheat. Plus Friskies is 1/4 the normal price o ground bee.Cheaper and aster is better, right? And it’s really gonnataste great, right?

WRONG! It would taste like something only your cat would eat! So, i you wouldn’t eat spaghettiwith Friskies favored spaghetti sauce just because it’s

FRISkIES FLAvOREDSPAGHETTI SAUCE ON SALE

by bILL MckNIGHT

APPRAISER SOUND OFF

TheNicheReport.com



requires the astest turn times and has historically paid thelowest ees. How embarrassing it must have been to haveto send out this message to their appraisers.

Rather than addressing the decient appraisals withconstructive process changes, they instead attempted tosolve the problem by issuing new criteria to their already

burned out and underpaid appraisers. Those additionalcriteria included aerial photos o the subject and screenshots o local MLS listings, all or no extra pay. Theseadditional criteria did not include allowing their appraisersmore time to adequately analyze and veriy market data orto write meaningul market analyses.

Now, do not misunderstand me. I am not suggestingthat the cause o this problem lies solely on the shoulderso AMCs or lenders. I contend that a large part o the problem is a residential appraisal industry that isdisjointed, undereducated and apathetic. It is my belie

that a large percentage o residential appraisers do notully understand the gravity o their assignments or whatthey certiy to when they sign each report. The appraiser’spurpose in each transaction is, at the core o the matter,to protect the public trust. In a nutshell, an appraiser’sunction is to provide an independent valuation impartially and with objectivity, which should result in opinions andconclusions that are knowledgeably developed, credibleand meaningul to the users o that service. Unortunately,there are those within our industry who do not subscribeto this idea, either through ignorance or intent, and

thereore, lack the ability or desire to protect the publictrust as a critical part o the appraisal process.

It is my assertion that when an appraiser ully understands the true purpose and unction o eachassignment, the need to take the time to perorm athoughtul job with specic analysis o the market dataand veried inormation to support the conclusions drawnwill become sel-evident. Once an appraiser has embracedthe concept o protecting the public trust and is willing

to provide a product that is supported with ully veriedmarket data and market driven adjustments, the idea o burning through an appraisal would be unthinkable andimpossible. Moreover, the thought o accepting a $200 eor a product that requires considerable time to research,analyze and veriy market specic inormation would be

out o the question.Instead o appraisers ocused on protecting the public

trust, what we now have is a glut o appraisers who eelextorted by the AMC’s insistence that “all o the otherappraisers” are willing to accept the lower ees and astturn times. Consequently, these appraisers eel that i theywould like to continue to eed their amilies they also haveto accept lower ees and aster turn times.

Remember your mom saying, “I all the other kids arejumping o the Golden Gate Bridge does that mean youwill too?” Well, no, Mom! I’m not jumping o with the

other kids. I absolutely don’t care what they are doing. Iknow what my job is and I take pride in it. Ethics canbe expensive and ethics might cause me to lose a client ortwo. Ultimately, I eel condent that the clients who valuemy ethics and skills will be able to make a more inormedlending decision based on properly supported and veriedinormation. I have been charged with protecting the publtrust and I will continue to do so. I that responsibility takestime and ull ees, that is my choice and my job.

Oh, by the way, I won’t eat Friskies favored spaghettisauce! Will you?

Bill McKnight is a Sacramento, CA area appraiser and an activist in the appraisal proession. He is Vice-President o the Sacramento Chapter o the Real Estate Appraisers Association.McKnight started the online Real Estate Appraisers Forum and is the co-creator o “The Appraisal Show.” McKnight is also active with the Sacramento Association o Realtors and says that his involvement with Realtor organizations gives him a broad view o the proession and unique access to industry leaders.

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wHAT IS yOUR MORTGAGE

I received hundreds o questions again this month. The more the agencies update their ‘updates,’ the more conused we all become!

Fannie/Freddie Seller Seconds: I have a buyer putting 10 percent down and would like the seller to

hold a 10 percent second mortgage. What terms & conditions will be required for the seller-held 2nd? Mortgage Talking Points™ “Seller-Held Second Mortgage Rules”.

Fannie Mae Rules or Seller-Held Seconds:• Nonegativeamortization

• Noballoonwithinveyears

• Marketrateofinterest–mustbewithin2percento current standard rates or 2nd mortgages

• Nowrap-aroundwithstmortgagedebt

• Mustfullyamortizeandhaveregularpayments• Noprepaymentpenalty

• Cannotrestrictpre-payment

• Mustqualifywithpaymentinthehousingratio

• Variablepaymentmortgagesokayaslongastheycomply with all o the above and the paymentremains the same or a 12-month time period.

Freddie Mac Rules or Seller-Held Seconds:• Nonegativeamortization

• Noballoonwithveyears

• Regularmonthlypayments

• Mustqualifywithpaymentinhousingratio

• Mustdisclosetermstoappraiser,includingwhoigoing to hold the 2nd mortgage

• Rateon1stmortgagemustbexedrateloan;rateon 2nd can be ARM or buy down

• Variablerateloansokifthepaymentremainsconstant or 12 months over the lie o the loanand the rate cannot increase more than 1 percenteach 12-month time period.

Fannie Flex Loans: I understand that Flex 97 went away. Is that correct?

Fannie did eliminate the Flex program, but they spread the eatures o the Flex program among all programsThe article rom October should help you. Max LTV is s

97 percent.

VA Short Sale Time Limit: What is the time limit foa new VA loan after a short sale (he had a conventionaloan). He tells me he has spoken directly with the VA and has been told that two years from the date of sale isacceptable but I can not nd anything in the guidelines

VA has no ocial written policy on short sales, butthey have always treated them the same as oreclosures,which means that there is a two-year wait period rom

wHAT'S yOUR MORTGAGE IQ?by MortgageCurrentc

TheNicheReport.com



the date o the short sale. (I had to call my Regional LoanCenter last year to nd this out as well.) Also, investors may have additional, more stringent guidelines.

FHA Purchase Repairs Appraisal came back with FHA required repairs. It is an REO and seller will not pay

for repairs unless price is raised to cover them. Is this allowable after the loan has been underwritten, to change the purchase price on contract to cover required repairs?

FHA does not prohibit this. However, i you changethe contract your seller could take quite a while to "re-approve" the sales contract. Another option to consider isto add in the cost o repairs to the loan amount, which isallowable per FHA. See guidance below.

Repairs and improvements required by the appraiseras essential or property eligibility and to be paid by theborrower may be added to the sales pricebeore calculatingthe mortgage amount. (The appraised value will refect theserequirements.) For the cost o repairs and improvementsto be eligible or inclusion in the mortgage amount, thesalescontract or addendum must identiy the borroweras responsible or paying or or otherwise completing therepairs or improvements.

The amount that may be added to the sales pricebeorecalculating the maximum mortgage amount is the lowest o:

a. The amount the value o the property exceeds thesales price; or

b. The appraiser's estimate o repairs andimprovements; or

c. The amount o the contractor's bid, i available.

Only repairs and improvements required by theappraiser may be included. Any repairs completed by theborrower on the property beore the appraisal is made

are not eligible or inclusion in calculating the maximum

mortgage. The amount that cannot be nanced into the

mortgage will become part o the borrower's required cash

investment.

I repairs cannot be completed beore loan closing

due to weather-related delays, the lender must establish anescrow account to ensure eventual completion o all required

repairs. See HUD Handbook 4145.1 REV-2 or details.

Weatherization and energy eciency improvements may be

included i they qualiy. I the weatherization items cannot

be completed beore loan closing due to weather-related

delays, the lender must establish an escrow account to ensure

eventual completion o all items. See HUD Handbook

4145.1 REV-2 or details.

The amount that may be added in calculating the

maximum mortgage is:a. $2000 without a separate value determination; or

b. Up to $3500 i supported by a value determination

by an approved or FHA roster appraiser or DE

underwriter; or

c. More than $3500 subject to a value determination

by an approved or FHA roster appraiser or DE

underwriter and a separate on-site inspection

made by a FHA-approved ee inspector or DE sta

appraiser.

The cost o solar energy systems may be added directly

to the mortgage amount (beore adding the UFMIP) ater

applying the LTV ratio limits. The statutory mortgage

limit or the area also may be exceeded by 20 percent to

accommodate the cost o the system. The amount that

may be added to the mortgage is limited to the lesser o

the solar energy system's replacement cost or its eect on

the property's market value. Both active and passive solar

systems are acceptable, as are wind-driven systems. See

HUD Handbooks 4150.1 REV-1 and 4930.2 or details.When purchasing HUD-owned property using FHA

nancing, 100 percent o the repair escrow may be nanced.

Provided monthly by www.MortgageCurrentcy.com

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Mortgage Talking Points ™, charts and checklists included.

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wHAT IS yOUR MORTGAGE



AGENCy & FHA

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consum-ers, as dened by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to eachlender’s information on products, program, procedures, representations, and warranties for details.

360 Mortgage Group866-418-2997

Bank of Internet888-833-0555 x 1508

Axis Capital Group Inc.888-229-4773

Flagstar Wholesale Lending(866) 945-9872

Icon Residentialwww.cowoll.com

United Wholesale Mortgage(800) 981-8898 x. 5515

Cov, fha, Va poolo poc. to bcom ppov boo o vw , v o wb www.360moop.com

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GreenLake Real Estate Fund, LLC310-462-4637

Manaseh, Epharim & Associates770-840-0112

Windvest Corporation877-285-0777



NICHE REPO

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CONSTRUCTION

JUMbO

Bismark Mortgage Company800-350-7199 x106

Bank of Internet888-833-0555 x 1508

Ow Bl spc Coco o l aL, ak, aZ, Ca, CO,ga, hi, id, iL, in, kY, Me, Md, Ma, Mi, Mn, MO, nY, nV, nJ, nC, Oh, Or, Pa,tn, tX, ut, Va Wa.

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COMPLIANCE & AUDIT

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SERvICE PROvIDER CLASSIFIEDS

Accurate Quality Control, Inc.770-931-5999

Adfitech Inc.800-880-0456

Quality Mortgage Services615-591-2528

Waquis310-696-9515

HTDI Financial877-877-4834 op 5

Credit-Aid Software800-257-1192

Entitle Direct

877-936-8485 or 877-9entitLe

Linear Title & Closing401-841-9991

Mortgage Insurance Agency866-355-9944

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AllRegs(800) 848-4904

Applied Business Software800-833-3343

StreetLinks Lender Solutions800-778-4788

DocMagic800-649-1362

TECHNOLOGy

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48 February 2011

MARkETING & LEAD GEN

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Lender 411

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Mailer Leads866-783-4053 x 14

OSI Express866-674-1999

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National Valuation Service786-581-9171

StreetLinksLender Solutions800-778-4788

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American Pacific Mortgage866-625-9352

Benchmark972-398-7676

GSF Mortgage Corporation877-494-4448

Guaranteed HomeMortgage Company, Inc.888-572-3602

Land Home [email protected]

Perfect Net Branch877-282-4577

Sierra Pacific Mortgage800-447-3386

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TRAINING & EDUCATION

AllRegs

800-848-4904

Kaplan Real Estate Education877-792-4523

MortgageCurrentcy.com800-231-4787

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360 MORTGAGE GROUP

National Wholesale Mortgage Lender 360mortgagegroup.com

866-418-2997

ACCURATE QUALITy CONTROLwww.AccurateQC.com

Genny Kelly or Judy Nash-Ellis770-931-5999

[email protected] or

[email protected]

ADFITECHProvides Residential Mortgage Post Clos-

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and LOANVAULT Imaging o Conven-

tional & FHA Products.www.adtech.com

John Rosenhamer

800-880-0456

[email protected]

a la mode, inc.Websites and marketing tools or real

estate proessionals.www.alamode.com

1-800-ALAMODE

[email protected]

ALLREGS

Leading inormation provider or the mortgage [email protected]

AMERICAN PACIFICMORTGAGE CORPORATIONOne o the largest independent retail

banking and branching companies in the country.www.apmortgage.comMelissa [email protected]

APPLIED bUSINESS SOFTwAREOrigination and Servicing sotware or hard money lenders.

[email protected]

ATTENTION LENDERS!!Buyers o Distressed [email protected]

AXIS CAPITAL GROUP INC.Specializing in FHA,203k, Reverse.AZ,CA,CO,FL,HI,TX,WA.AxisCapitalGroupInc.ComSergio [email protected]

bANk OF INTERNETwww.bolendingpartners.com

Darin Judis

888-833-0555 xt 1508

[email protected]

bENCHMARk

A community o mortgage proessionals

united by Benchmark core values Rela-

tionships, Success, Dynamic, Excellence,

and a Positive Attitude specializing in

retail branching throughout the United

States

www.iambenchmark.ino

Karri Vaught

972-398-7635

[email protected]

bISMARk MORTGAGE COMPANy

Residential Construction Loans.

www.bismarkmortgage.com

James Minarsich

800-350-7199 x106

[email protected]

bLITzLOCAL

Provides our clients with every tool neces-

sary to run a proftable internet marketing

campaign.

www.blitzlocal.com

888-811-2448

50 February 2011

LENDER & RESOURCE DIRECT



TheNicheReport.com

DOCMAGIC

The largest dedicated loan document production company in the country, delivers a usion o solutions guaranteed to meet today's complex loan document challenges.www.docmagic.com800-649-1362

ENTITLE DIRECTSavings up to 35% or more on title insurance in 30 states.www.EntitleDirect.com/mortgage

877-936-8485 or [email protected]

FLSFINANCIAL LEAD SERvICESExclusive Direct Mail Transers 225K average loan size.www.nancialleadservices.comTerry Wilson877-290-7903

[email protected]

GREENLAkE REAL ESTATE FUNDPrivate Commercial Lender in CA & NV.Kamau [email protected]

GSF MORTGAGE CORPPro Branch, correspondent and wholesale opportunities.www.gssales.comDebbie [email protected]

GUARANTEED HOME MORTGAGECOMPANy, INC.Established and well-unded Mortgage Banker since 1992.www.ghmc.com and www.joinguaran-

teed.com

Kelley Berkheiser

or Louis Tesoriero

888-329-GHMC

[email protected]

HTDI FINANCIALProvides credit repair business options to increase revenue.www.outsourcedisputes.com

877-877-4834 opt 6

[email protected]

LAND HOME FINANCIAL SERvICES, INC.Our branches enjoy the satisaction o being entrepreneurs while reaping the benefts o a wide array o services and support.www.lhbranch.com

[email protected]

LENDER411.COMMortgage Leads and ree Internet Market- ing. Sign up FREE.www.lender411.com

Rocky Foroutan

888-333-6628 x11

[email protected]

LINEAR TITLE & CLOSINGTitle Insurance & Settlement Services

www.lineartitle.comNick Liuzza

401-841-9991

[email protected]

MAILER LEADSLenders and Brokers who use our mailers are not only surviving -- they are thriving.www.MailerLeads.com

866-783-4053 ext 14

MANASEH, EPHARIM & ASSOCIATESDomestic and international fnancier,oer up to 100% fnancing to qualifed investors/borrowers www.meandassociates.com

R.D. Walker

[email protected]

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52 February 2011



bRINGING UP THE REAR

oreclosed on the properties, and both banks had CONCEDEDthat was the case. This was them bringing in the paperwork thatwas to prove otherwise.

I just want to say that I would not have brought such absurd“proo,” i I had to argue my own case in trac court. I wouldhave been too embarrassed to do so… and I’m not a lawyer. Thatthe attorneys or Wells Fargo and US Bankcorp would present thissort o crap to a judge is nothing short o astounding, i you ask me.

Apparently, the justices agreed… in act, in his opinion,Justice Cordy wrote:

… what is surprising about these cases is not the statement o principles articulated by the court regarding title law and the law o oreclosure in Massachusetts, but rather the utter carelessness withwhich the plainti banks documented the titles to their assets.

Now, there was certainly more to the case… this is notintended to be a comprehensive review o all o the legal theories

involved. But I want to make sure we all understand what’s at thecore o this situation… what caused Bank o America, JPMorganChase, Wells Fargo, and GMAC, et al, to employ “robo-signers,”and attempt to oreclose using raudulent adavits claiming thateach bank had lost the actual notes.

All a bank has to do, as trustee o a given securitized trust, inorder to oreclose legally, is to show up with the promissory notethat was signed by the borrower and when the judge turns it over,he or she should see that it was assigned to the trust that is nowtrying to oreclose.

Well, there is one more wrinkle worth mentioning. The notehas to be assigned to the trust within a certain time rame becauseit’s a REMIC trust… a tax-exempt entity and the Internal Revenue

Code’s rules on such transers are very clear.The banks want us to believe that they all lost the notes

with the assignments on the back… they all lost them… all atthe same time. As I mentioned above and took directly rom thecourt documents by the way, the banks brought in HUNDREDSo pages o supposed documentation to prove that the trustsdid in act hold the notes at the time o the oreclosure… that’sHUNDREDS OF PAGES… but not one assigned note.

And remember, the bankers had plenty o time here… oncethey lost in the lower court, they led motions to vacate and weregiven more time to bring in the proper paperwork. And this casewent all the way to the Massachusetts Supreme Court, so it’s notlike that happens in a hurry.

In the end, the banks tried the argument… everybody’s doingit, so why can’t we do it too. My mother heard this argument romme once, and I was seven years old. She didn’t buy it, and I nevertried it again. The court’s response was to say:

… the legal principles and requirements we set orth are wellestablished in our case law and our statutes. All that has changedis the (banks’) apparent ailure to abide by those principles andrequirements in the rush to sell mortgage-backed securities.

Why can’t the banks just show up with the note assigned

- continued rom page 54

to the trust, as they are legally required, when they oreclose?Because they all lost them? Is that the story rom the world’s largbanks… that they’re all having a problem losing stu? It was a mmisplacement?

The question, o course, is what happens next? What happi the bank cannot establish that a note was assigned to a trust

that now wants to oreclose? Does the amount owed become anunsecured debt, dischargeable in bankruptcy? And i the trust dnot hold the note because it wasn’t ever assigned, who owns it? Awhere is it, damn it?

A lot o people say that the homeowners shouldn’t get their homree and clear under any circumstances. They say that in buying thehomes in the rst place, the homeowners gambled and lost… andthereore should lose their homes that they now can’t renance andthereore can’t aord. But, according to that way o thinking, why shouldn’t they be able to discharge the debt that’s no longer secured bythe mortgage… it would seem that they gambled and won. Gambone should remember, cuts both ways, does it not?

I asked a riend o mine who is a airly senior executive at amajor bank, although not one o those mentioned here, and he saithat he can’t imagine the banks losing them. He explains that thtruck pulls up at his bank to take documents such as the notes inquestion to Iron Mountain, where they are expertly stored in a saltmine, o all places. And i you think Iron Mountain lost them, vwww.ironmountain.com and get back to me.

So, perhaps the banks didn’t lose the notes in question…perhaps they just don’t want to show them to anyone in courtbecause when the judges fip them over to look at the back they wind that they were NOT ASSIGNED to the trusts as they weresupposed to be. And then the investors will be something less thpleased that they were sold empty securities… mortgage-backed

securities without the mortgage-backed part. And i they weren’assigned to the tax-exempt REMIC trusts… well, then someoneowes quite a bit in back taxes, doesn’t someone?

I write a blog that sits squarely on the side o homeowners inthis ght, but I didn’t say anything about this decision right away.The American Securitization Forum, however, did issue a statemeimmediately ollowing the ruling:

The ASF is pleased the Court validated the use o the conveyancelanguage in securitization documents as being sucient to provetransers o mortgages under unique aspects o Massachusetts law.

And then…“The ASF is condent securitization transers are valid and

ully enorceable,” concludes the ASF’s Executive Director, TomDeutsch.

And there you have it, ladies and gentlemen… this month’sREAR… Tom Deutsch. And that’s all I have to say about that.

Martin Andelman is a sta writer or The Niche Report. He also writes an almost daily column on ML-Implode called Mandelman Matters. He also publishes a Monthly Museletter and you can ollow “Mandelman” on Twitter. Send your responses to Martin@ TheNicheReport.com

TheNicheReport.com



Last month, the MassachusettsSupreme Court ruled againsttwo banks, Wells Fargo and US

Bankcorp, who had each oreclosed onhomes and were now asking a judge todeclare that they held clear title to theproperties in ee simple.

The decision was surprising to quitea ew, and a major landmark or those on

the oreclosure deense side o the ght. Bank stocks got pretty much creamed ater the decision was announced. Foreclosuredeense blogs went into sheer elation mode, and it’s easy tounderstand why… nally, a decision by a top court had gone

their way, establishing that the rules o oreclosure weren’t sometrivial set o technicalities.

But, what was so amazing about the decision was not that itwent against the banks. What was amazing was how the banksattempted to deend their positions.

Here’s an overview o what happened…The judge ruled that the oreclosure sales were invalid

because the notices o the sales named U.S. Bank and WellsFargo, in their respective oreclosure actions, as the mortgageholders but neither had yet been assigned the mortgages. Thejudge ound, based on each PLAINTIFF’S ASSERTIONS, that“the plaintis acquired the mortgages by assignment only aterthe oreclosure sales and thus had no interest in the mortgages

being oreclosed at the time o the publication o the notices o sale or at the time o the oreclosure sales.”

Now, that’s just stupid and I think we can all agree thatbanks should own homes beore oreclosing on them, but that’snot the amazing part…

The banks moved to vacate the judgments, and at thehearing they CONCEDED that each complaint alleged a post-notice, post-oreclosure sale assignment o the mortgages, butthey now said that there were documents that would show apre-notice, pre-oreclosure sale assignment o the mortgages. In

other words… okay, we did it wrong last time, but we’ve got ouract together now, your Honor.The judge said okay, ne… go etch them then.In response, the banks showed up with HUNDREDS OF

PAGES OF DOCUMENTS, which they said established thatthe mortgages had been assigned to them beore the oreclosures,and submitted them to the judge.

Many o the documents the banks submitted to the courtrelated to the creation o the securitized mortgage pools in whichthe mortgages in question were supposed to be included.

US Bankcorp showed up with a private placementmemorandum (“PPM”), a 273-page, unsigned oer o mortgage-backed securities to potential investors. Basically,

a boilerplate document that could have been printed the day beore, with language saying that mortgages “WILL BE”assigned to the trust and that “each mortgage loan will beidentied in a schedule appearing as an exhibit to the TrustAgreement.”

But, the bank didn’t provide any sort o schedule thatshould have listed the loan in question as being among themortgages assigned in the trust agreement.

Wells Fargo, in a variation on the same theme, providedthe judge with a copy o the Pooling & Servicing Agreement(“PSA”), but the copy was downloaded rom the Securitiesand Exchange Commission website and was not signed, so itdidn’t contain the loan schedules reerenced in the agreement

that should have identied the mortgage in question as beingincluded in the pool.

In an attempt to make up or this obvious inadequacy,Wells Fargo also brought in a schedule that it said identied theloans assigned in the PSA, but the schedule did not list property addresses, names o mortgagors, or any number correspondingto the loan or servicing number on the mortgage in question.

Now… let’s take a moment to review things… in botho these cases, the documents showed that the banks weren’tassigned the mortgages in question until ater they had

bRINGING UP THE REARTom Deutsch, Executive Director, American Securitization Forum

by MARTIN ANDELMAN

- continued on page 53

bRINGING UP THE R

54 February 2011



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