tnr - may 2010
DESCRIPTION
Feature Article Change You Can Believe In by Rick Roque & Josh WeinbergTRANSCRIPT
Issue 034
May 2010
TheNicheReport.com
Master of Illusion - The Con Man12 35Tricked into committing fraud.
Quality Control:The 2009 Year End ReviewMortgage stats for mortgage geeks (a good thing.)
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18 Change You Can Believe inAnd the emergence of the superbroker.
By Rick Roque & Josh WeinBeRg
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6 May 2010
niche RePoRTsconTenTs Issue 034 May 2010
FounDeR & PResiDenT Robert Pegg [email protected]
co-FounDeR & PResiDenT David Pegg [email protected]
MAnAging eDiToR Stewart Mednick [email protected]
eDiToRiAL / conTenT MAnAgeR Kristen Moser [email protected]
AccounTing MAnAgeR Shawna Ingram [email protected]
ADveRTising DiRecToR Jessica Grizzle [email protected]
ADveRTising sALes Heather Bopp [email protected]
PRoDucTion MAnAgeR Henry Suchman [email protected]
PRoDucTion AssisTAnT Dawn Exner [email protected]
coLuMnisTs Martin Andelman Karen Deis Frank Garay Stewart Mednick Brian Stevens Dennis Yu
conTRiBuTing AuThoRsAngelina Carleton Tommy Duncan Brad Kelso John Lovallo Jerome Mayne Rick Roque Josh Weinberg John Wrobel
Master of Illusion - The Con ManJeRoMe MAynewww.fraudcon.comTricked into commiting fraud.
12
Fearing FNMA's New Loan Quality Red Flags?BRAD keLsoExEcutivE vP, SalES and markEting informativE rESEarch
Simple insights on two of FNMA's loan quality initiatives can save repurchase risk.
24
Quality Control: The 2009 Year End ReviewToMMy DuncAnExEcutivE vicE PrESidEnt Quality mortgagE SErvicES llcMortgage stats for mortgage geeks (a good thing).
35
Bringing Up The Rear: Jon LeibowitzMARTin AnDeLMAnmandElman mattErS ml-imPlodE.com
FTC Chairman.
54
DePARTMenTs
18 Change You Can Believe InAnd the emergence of the superbroker.
09 FRoM The eDiToR's Desk
38 RuLes & ReguLATions heADLines
28 FRAnk AnD BRiAn sPeAk
14 onLine LeAD geneRATion
10 LeTTeRs To The eDiToR
32 APPRAiseR sounD oFF
41 TiP oF The MonTh
49 LenDeR & ResouRce DiRecToRy
PRiMe & FhA pg 45
coMMeRciAL pg 45
hARD Money & non-PRiMe pg 46
consTRucTion pg 46
seRvice PRoviDeRs pg 47
Rick Roque & Josh WeinBeRg
suBscRiPTions
This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer and you do not currently receive The Niche Report, please send your name, company name, and address to [email protected].
Send address change requests to [email protected]. Remember to include the old address.
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To inquire about advertising in The Niche Report, please call 866.964.2695, or send an email to [email protected]. Visit our website, www.TheNicheReport.com to download a copy of our Media Kit.
eDiToRiALs / ARTicLes
To submit an article for consideration in The Niche Report, please send an email to [email protected] or call 866.964.2695. We are interested in original writings relevant to mortgage brokers and other real estate finance professionals.
If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to [email protected].
The niche RePoRT PoLicy
The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.
Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: [email protected] www.TheNicheReport.com
I’ve decided to give Stewart Mednick, our managing editor, the month off from writing his normal Editors Forward, even though I know he hates my writing, as evidenced from his first Editors Forward in the February 2010 issue. Thanks Stewart! We’ll catch you back here next month.
I love working for The Niche Report. My job takes me far and wide and I get to meet some of the brightest and most innovative people leading us through our revitalization. This past month The Niche Report attended the 27th Annual Conference of Regional MBAs. It was bigger and better than the last three years since we started participating in this event. The tone was extremely optimistic and I was proud to be in attendance. Bob Levy, if you are reading this,
please know that we are huge fans of the MBA/NJ – You and your crew put on a fantastic show.
It was here, at this event in Atlantic City, New Jersey, that I met Rick Roque of the Menlo Company, an industry con-sulting firm based in Washington DC. Rick is someone, who at first glance, seems very unassuming. But after twenty minutes of talking to him, I realize that I am speaking to someone who knows this industry inside and out, both in terms of a technical aspect and a business perspective. He has garnered his knowledge from years of working in the trenches, and most recently, talking and consulting with lenders and industry companies of all sizes all around the coun-try. If you ever talk to Rick via cell phone, he is most likely in an airport running to his next departure. Inside our 20 minute conversation, Rick starts explaining to me the fundamentals of why the small to mid size brokers/bankers (Yes, I meant to say Banker) are in serious trouble, but at the same time can save themselves by evolving with the rapid and deep change our industry is undergoing. I thought it was fascinating and by the end of our conversation I was begging Rick to write a feature article for this very issue on this very topic. Let me tell you that it is very hard to impress me and even harder to attract my attention for even five minutes (due to my self diagnosed ADD). Rick, along with his colleague Josh Weinberg, another industry super-star who will help lead us through this revitalization, has graciously co-authored our feature article titled Change You Can Believe In – The Emergence of The Super Broker. I implore you to read this article and take from it what you can.
The Niche Report works very hard to set ourselves aside from our competition (or lack there of ). This means bring-ing you content, month after month, leaving you, the reader, walking away enlightened, educated, laughing, or even baffled. In fact, at these industry conferences, I can tell between a TNR fan versus some uninformed Jackhole who has never read us and is walking around with their horse blinders on trying to avoid eye contact (I love these guys) - it’s re-ally very funny. The guy or gal who reads TNR can’t wait to tell us how much they either loved or hated Mandlemans Bringing up The Rear column, and/or this includes any other articles written by our talented columnists who regularly contribute to TNR, such as Karen Deis, Dennis Yu, Adam Quinones, Matt Graham, Frank Garay, Brian Stevens, Stew-art Mednick, Naomi Trower, Brian Montgomery and any other contributing author who has helped TNR slice out our role in this industry. So, this is a big “Shout-Out” to our dedicated readers and writers – Thank You! We really do love you and we truly appreciate your patronage. The best is yet to come.
Keep up the fight,
Robert Pegg
FRoM The eDiToR's Desk
9TheNicheReport.com
MEMBEROfficial
10 May 2010
LeTTeRs To The eDiToR
Bringing Up The Rear: Howard Miller The Witch Hunter, March 2010 Issue
Good article. The point you've made is well taken. This whole thing about "scams" in the loan modification business is pretty consistent with how Mr. Obama and his Administration think about the private enterprise in general: it is one big scam! After all, businesses are profiteering from hard working people (like the "evil" insurance companies with their whopping 3-6% profit margins). Their utter disdain towards business and private ownership is quite obvious. Basically they are acting as if the private enterprise is only temporarily necessary to pay taxes in order to support the government, but preferably it should be abolished in the future in lieu of "this time it will be successful" new order (e.g. socialism or communism). Never mind all the empirical evidence that such a system never worked anywhere in the past (or present).
Robert W. DudekStatewide Home Loan Corp
Great article! I am so angry when all the fury is directed at the wrong people. The government programs are of no value. The ratio used for home modifications is the same exact formula (front end ratio) as the borrower qualified for so if their interest rate has gone up of course they will not qualify for a loan modification because they exceed the qualifying ratio. And if they have reduced income, of course the same applies. It does not take a math major to see that the loan modification programs are a scam as run by the government. But the other very significant factor that NO ONE is talking about is that it is not in the banks best interest to modify the loans, they can collect on the credit default swap, sell the property and collect again - sweet deal. Plus if the bank is one of the banks seized by the FDIC they have an agreement in place whereby the FDIC will cover 80% of the loss, the bank files the credit default and collects and than sells the house. I just love it another scam authored by the government. I think we need to open up the bank files and see just how much money they have made off this scam and just how much the government has cost the tax payer, that's the rip-off.
I don't do loan modifications, people believe they don't have to pay me so I tell them to contact HUD and get it done for free. But of course if they wanted to pay me I could point
out the defects in their documents plus remind the banks of their TILA violations, credit default scam and double dipping techniques. Plus most of the foreclosures are illegal because the beneficiary is really not the beneficiary and the trustee conducting the sale has not been substituted properly or at all. The scam shall continue until the people wake up. Would it help to point that out to the president of the California State Bar??
Patti GeibCertified Mortgage SpecialistCapital Line Funding Group
Cuomo’s Crossing: An Outsider's Appraisal of the New HVCC Rules, July 2009 Issue
I realize the writer did his own story or Appraisement of the issue. However, what the writer failed to realize is that mortgage brokers can't select their own appraiser for a reason. What isn't being released is the fraud that NAMB is trying to hide - Cuomo won't release (in detail) the rampant fraud mortgage brokers perpetuated on the general public and appraisers. The story helps the crooks who participated in the economic downfall get a leg up. The appraisers who are complaining hard core about the HVCC and Appraisal Management are the ones who can't go back to the old ways of fraud and making money doing it. I'm sorry, but the writer basically has helped criminals while bashing criminals. We have fought for a decade to get rid of commission driven professionals from cherry picking and blackmailing real estate appraisers. Your article does more worse than good, sorry to say.
By the way, the HVCC doesn't say that Appraisers are forced to use AMCs. The writer needs to get better facts so its opinion will be more credible. Additionally, the problems started before Cuomo. The HVCC is legal, as well; all it does is take away the privilege of some crooks from selecting their own appraiser.
I give the article a D+, it was pro-crooks and anti-crooks.
Benji BrossetteAn Independent Real Estate Appraiser Trainee
from the State of Louisiana - A Real Estate Market Analyst!
Dear Benji – Thank you for taking the time to voice your opinion. Your response will most certainly draw a crowd.
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12 May 2010
Once upon a time I was a loan officer and I got involved in a gaggle of mortgage fraud
activity. It didn’t end well.I was originally contacted by a
guy named Milt (or so I thought). Milt had a plan; a scam, and other players in place – straw buyers, appraisers and title agents. He
presented himself as a real estate investor who simply needed a good loan officer to handle all his business. He’d heard great things about me. I was in.
I never wanted to admit that I was recruited – it just doesn’t resonate well with me. It sounds like a cop-out; like I just wasn’t smart enough and allowed myself to be tricked into committing fraud. If someone told me that they were recruited into a fraud scheme, I might think they were implying that they couldn’t help it or that it wasn’t their fault, or worse – they were a victim. It just sounds lame.
It’s been over 10 years since I was indicted on fraud conspiracy charges and more than 15 years since the actual crimes took place. Since then I’ve had the opportunity to rub elbows with some pretty top notch fraud experts and ethics gurus. I’ve gotten quite an education and now have a better understanding of con men and how they operate.
Of course you need to be on your toes and of course you need to know your profession. You can be smart, attentive and be the best at what you do, but someone can still beat you. Unfortunately, this is an exception to my theory of, “It is unlikely that you will be beat at your own game.”
Enter, the confidence man. Con men, for short, are smart, clever, crafty, likeable and sincere. They are fearless,
driven and don’t ever doubt themselves. They will do everything they can to gain your confidence and take, not earn, your trust. They will get you to do what they want you to do. They do know how to play your game and they will beat you.
They are designers of illusion and masters of influence. They will construct façades – personas of sincerity and honesty – and for most of us, it will not be transparent. They do not care about you or your families; both are disposable to them. They are patient and they are survivors, and they will not stop.
This is a strong warning, as well it should be. I believe you are smart – probably the smartest reader who has ever read something that I’ve written (and I don’t say that to all readers), but even the smartest can be fooled.
There is a great book by Robert B. Cialdini called, “Influence – Science and Practice.” After reading it, I was able to look into my past and identify certain methods of influence that were used by a certain con man over 15 years ago.
My con man, Milt, was sincere, likeable, fearless, driven and had plenty of confidence. He created the illusion that he was a big-time real estate investor who bought and sold masses of residential real estate in Minneapolis, Chicago and Atlanta.
He first contacted me in March of 1994 because he needed a good loan officer who could handle a lot of business. This initial conversation was lengthy, and was full of compliments and promises. After that, he called me at least 10 times a day; sometimes just to chat about sports, music or movies. He became someone I looked forward to talking to. We seemed to have so much in common; he kind of became my brand new best friend.
By JeRoMe MAyne
Tricked into committing fraudMaster of illusion - The con Man
After about a month of courting, he sent me his first borrower. It was a guy named Josh who needed a loan to buy a house that Milt was selling – a house that Milt had just purchased for thousands of dollars less than Josh’s purchase price.
During the loan approval process, Milt provided me with income documentation for Josh that seemed a bit too perfect. I questioned the authenticity of these documents, but only to myself. I certainly didn’t want to accuse my new best friend of trying to commit fraud.
So I didn’t.I rationalized and justified my inaction in lieu of asking
Milt the tough, uncomfortable questions. I don’t think I rationalized and justified because I was weak or because I was raised wrong; without moral integrity. I wasn’t a newbie in the industry, and I wasn’t struggling for business or money.
The best explanation I have is that I was afraid of offending him or letting him down. I wanted to do a good job and live up to the “good things” he’d heard about me. I wanted to get this loan closed for him.
I did it because I liked the guy – he was a friend. We had the same tastes in sports and restaurants. Heck, we even liked the same kind of gin.
Here’s the real embarrassment – throughout our seven month relationship, he never asked me to do anything illegal for him. I just did it.
I do regret my actions and inactions of those “Milt” days. I do feel remorse for the losses incurred by the lender and the suffering of my business associates, my employees, my friends and my family. I can’t undo the past. I can’t un-light the match. But, you could learn from my experiences. Take this knowledge with you as you scurry about your busy days.
con Men’s MeThoDs oF inFLuenceObligation & Reciprocation. If I do something for
you, perhaps completely unsolicited, you will most likely feel obligated to do something for me. Be mindful of favors done for you. Ask yourself what the ultimate cost will be of accepting this favor, and can you afford to repay it.
Authority. If I act as if I am in charge, have more experience than you or simply assume a position of authority, it is likely that you will comply with my requests. I recommend questioning the motives of those who are constantly reminding you how long they’ve been in the business.
Personal Connection• Attractiveness–wearemuchmorelikelytobe
influenced by those people we find attractive. Think about it. Why do you think title reps and wholesale reps are always so good looking? Hmmm?
• Similarity–Wetendtotrustpeoplewho,webelieve, are similar to us. Birds of a feather don’t stick together by chance, they find comfort in commonality.
• Compliments–Men,evenmorethanwomen,crave praise. We are much more likely to do favors for someone who gives us praise; even when we know that the complimentor stands to gain something from giving us the compliment.
Convenience and Distraction. This industry is very fast paced and it is easy to get bogged down. This makes you vulnerable. Be wary of the client who seems a little too knowledgeable about your business process. Watch out for the client who seems to swoop in at just the right time help you.
About four months into my relationship with Milt, I realized that the lines had gotten blurry and every area was gray to me. I decided to cut ties, but it took almost three months to do so. By then, I was in deeper than I thought and my role in the conspiracy was rock-solid.
There are plenty of people out there who would ask the tough questions and wouldn’t be squeamish about confronting or accusing a client, business associate or friend of lying. Be the person I was not.
Four years later, in federal court, I plead not guilty to conspiracy to commit mail fraud, wire fraud and money laundering. As I sat back down in my seat, the bailiff called up another person who was being charged with the same crimes as me. It was my old friend Milt, but they didn’t call him by that name.
If you feel you have been recruited by a con man, I urge you to disengage. They need you in order for their scheme to work. And, resist the urge to close that one last loan.
I can admit it now; I was recruited by a con man. But I was not a victim. It was my choice. I stayed too long and did too much.
Jerome Mayne is a keynote speaker and author. He works with Fortune 500 companies and associations helping their people make the right decisions, and stay out of prison. He is the author of the book, Life Saving Lessons – the diary of a white collar criminal and the co-author of Mortgage Fraud and Predatory Lending – what every agent should know (Kaplan Publishing). Visit www.fraudcon.com. Contact him at [email protected] or 612-919-3007 to speak at your next company or association event
13TheNicheReport.com
Last month I talked about organizing your mortgage keywords together into tightly-knit themes—the result being ads that match more closely to the
search intent, a higher Click-Through Rate, higher con-version rate, and lower cost per click.
Today I will discuss how much you should bid on a keyword and what the appropriate budget should be. Whether you are just getting started with Pay Per Click advertising or are an experienced veteran, you should find something of value here.
For my first illustration, let’s assume you are a Boston mortgage broker, and you are looking at the keywords “mortgage” and “mortgage broker Boston.” The second keyword is more relevant to you and worth more. (Note: a keyword is really a “keyphrase” that can
have multiple words in it. It is confusing, but that is the industry lingo.)
Consider this pairing: “refinance” and “refinance with bad credit.” Which is more valuable to you?
Or how about these:• “loanmodification”versus“buyloanmodification
leads?”• "loanofficer”versus“becomealoanofficer?”• "commercialmortgage"versus"mortgage
commercial?"Not only are some keywords worth more or less
than others, there are some searches that are downright irrelevant. As we discussed briefly last time, if you are buying keyword “mortgage broker” on broad match, you also are buying “become a mortgage broker” without realizing it. “Mortgage broker” on broad match will match for any search that has both of these terms in it,
googLe ADWoRDs FoR MoRTgAge BRokeRs ii How Much Should I Be Spending?
onLine LeAD geneRATion
12282 FWL_7104P_OL.pdf 8/25/09 4:38:43 PM
regardless of order. So you would be buying “los angeles mortgage broker scandal” on a broad match for “mortgage broker,” even as a Boston mortgage broker if you’re not careful. Thus, match type is quite important in targeting the precise searchers and, therefore, paying the right price.
The RuLe oF TenOkay now, about how much you should be paying?
Many factors determine price — how competitive your market is, the particular keyword you are pursuing, the Quality Score Google assigns you, and what that click is worth to you. A good rule of thumb is to decide what a phone lead is worth to you and divide by 10. In other words, if a refinance lead is worth $80 to you, then you should target your bids at $8 for those keywords. If a new home loan is worth $20, then it is worth $2.
Why 10? Because that is a good click-to-call ratio. If your website is doing a good job of convincing people that you are worth a phone call, then 1 in 10 people visiting your site should pick up the phone.
Start running some traffic to your site using that rule of thumb. A common beginner mistake is to run a handful of clicks and then complain that it is not working or to make adjustments to the campaigns before you have statistically relevant data. If you have run three clicks on a particular keyword, it is not enough to tell if it is working or not. If we know that 1 in 10 clicks should result in a phone call, sending only three clicks is not enough to tell.
What I like to do is run about 200 clicks through, which should give you a decent distribution of clicks across a range of terms. If you do not have 20 calls, which is quite likely if you have not been optimizing your landing pages or are not performing call tracking, then it is time to evaluate whether your landing pages are poor or if you are buying the wrong traffic.
DiALing iT inLet me talk about bid optimization. If you are not
math savvy, do not worry, the rules are simple.When you have uploaded your campaigns, Google
assigns a Quality Score at the keyword level. If you do not see this Quality Score, then click on “columns” to expose the fields you can choose or you can mouse over the little bubble. Anything that is Quality Score five or lower is Google telling you that something is wrong—but that if you really want that keyword anyway, you can force your way in by bidding higher. Do not do this.
Odds are that you did not organize your campaigns properly. Fix it by splitting up those keywords into smaller ad groups that have more relevant ads and sending traffic to pages on your site that are more relevant. If you do not have a specific landing page, urn that keyword off until you have one.
Here are three other big no no’s in setting your bid prices:
• Bidding according to budget. This typically happens if you have an agency managing your account or if you are part of a large organization that pre-sets the budget each year. When bidding to budget, the goal is to spend the budget evenly across the month—which is not the same as spending it in the way that drives the most leads. Bidding to budget means that if you have a $3,000 monthly budget, then your goal is to spend $100 a day, even though some days, because of fluctuations in the marketplace, you should be spending a lot more—or it may be such that your budget should be $1000 because your landing pages are terrible. Trying to hit a particular daily spending target guarantees suboptimal behavior.
• Bidding to position. This is perhaps the most insidious of all PPC behavior, because of a human tendency to want to be “#1” at all costs. It may be that your boss wants to see the company’s name in the first spot whenever he does a search, even though it might be $20 a click and unprofitable to do so. Or maybe you just want to be ahead of the cross-town rival and are willing to lose money just to deny them that traffic. This is called “ego bidding” and is almost always unprofitable, measured by cost per lead. For those folks who want to bid up to be in the top few positions, either they are incredibly smart (and have highly sophisticated techniques to justify this behavior) or they’re blindly throwing away money.
• Bidding to Cost per Click. This strategy assumes that every click is worth the same. The net result is that you end up throwing away the good searches (which will almost certainly cost you more money) and end up buying a lot of garbage traffic. It does not have to be cost per click. It can be any metric that the boss or the paid search analyst is fascinated with;click through rate, bounce rate, etc. The result is the same: behavior that is suboptimal for profits.
16 May 2010
onLine LeAD geneRATion
So what is the right answer on how much to spend? You must take into account three metrics simultaneously:
1. Your cost per lead.2. The quality of the lead.3. How many leads per month you are delivering.Looking at any of these metrics in isolation will
hurt your campaigns. For example, maybe you have been able to cut your cost per lead from $50 a lead to $25 a lead—reducing your CPL(cost per lead) by 50 percent. But what if that comes at the cost of reducing from 100 leads a month to just 5 leads a month? What if you are able to increase the number of leads and decrease the cost per lead, but the lead quality goes down? The same distortions come into play.
See how tricky setting the right price per click can be? Now imagine if your campaigns are not organized well, and that you have mixed together keywords of different intent together into the same ad group. Now it is nearly impossible to sort out which of the keywords are of good or bad quality. Worse yet, what if you are not using call tracking to precisely measure how many calls you are receiving from your paid search campaigns - hoping that the agents on the other end of the line are asking users how they heard about you? Users do not remember and agents do not obey as well as you might think.
Provided your campaigns are well-organized to start with, as we described in our last article — and you have call tracking in place — you will be able to measure how many leads you are receiving from each ad group, the quality of those leads, and what price you are paying. Armed with that information, you will be able to make smart bidding decisions and determine what the appropriate budgets should be on paid search.
Next month, I will talk about landing page optimization; an area to consider if your conversion rates are still horrible.
Dennis Yu is co-founder and CEO of the search marketing firm BlitzLocal, which provides local search and lead generation solutions to local, regional, national and international enterprises. Clients include J.C. Penney, WWE, Equifax, the March of Dimes, the Grameen Foundation and more. Yu blogs about search industry trends at dennis-yu.com.
onLine LeAD geneRATion
Change You Can Believe in: Mortgage Market attrition,
ContraCtion & regulation, and the eMergenCe of the Super Broker
Do you understand the industry well enough to make the right changes to your business? We’re afraid you don’t
and may be out of business within two years. The line between perception and reality
is often blurred by emotion. Few things in life cause us to act based on our emotions more than change. So, if you have been in the mortgage industry for longer than six months, you have likely been pretty emotional the past year or two and feeling a little unsure of what your future reality may look like.
I remember attending a regional conference held by the CAMP (previously CAMB) in 2007 and hearing an anecdote about being a mortgage broker. It went something like this:
…I remember what it felt like being a mortgage broker just six or nine months ago. I’d be at my son’s soccer game or in line checking out at the grocery store and in conversation people would ultimately ask what I did for a living. I’d let them know I was a mortgage professional and originated mortgages. This would usually lead to a response of, oh…I was thinking about refinancing my house, maybe we should talk, or do you think the market has topped out, should I still consider buying a home? There’s a reason those are two of my favorite places to find new clients! Now, however, when I’m in a similar situation and people ask what I do for a living, when I tell them I’m a mortgage broker, their most common response is, oh you poor thing…do you need a hug?...
While I first heard that story over three years ago I continue to tell it because even now, I see people in the mortgage industry, some with over 20 years experience, still not grasping the reality that their business and their industry has changed. Their customers can see it, the law
By Rick Roque & JoshuA WeinBeRg
makers and regulators can see it, but they are so focused on the fine details, or finding the next deal that they lose track of perspective and ultimately their reality has changed without their even knowing it.
While we can all agree change has already taken place and is likely to continue, it is helpful to analyze what is changing and how that will affect our industry for the next couple of years. Whether you are the owner of your company, a seasoned top producer, or even a temporary production assistant you need to know what is coming and how it will affect your role in the industry.
To analyze the changes to the mortgage industry it is helpful to isolate the types of changes into three distinct categories: 1) changes to the mortgage market; 2) changes to the mortgage profession and 3) changes to the mortgage industry itself. It is important to understand each of these categories of change and how they impact a mortgage company. After speaking at, or attending over 50 mortgage conferences and events across the country, we are convinced of the need to help educate mortgage professionals in these three areas in order to help them best manage their company. More simply put, to help lead an industry presently in disarray.
The lack of education in these areas can be partly attributed to the speed at which change is underway within our industry and partly attributed to the isolated box mortgage professionals fall into given their financial success, local market penetration and micro economic forces. In our discussions with business owners, these are some real life examples we feel exemplify the dangers of losing perspective or ignoring the signs of change.
“What happens to California can’t possibly impact me in Alabama- we have a $5MM mortgage brokerage and we are making money;”
One of Rick’s personal favorites, “We are a 99% refinance business – we’ve ridden these waves before and we are not going to become a new purchase shop.”
Another good one, “We will be the last mortgage broker standing.”
And one of Josh’s favorites, “I don’t feel the need to focus on government products; things will go back to where they were in 6 months or so.”
Normally, this wouldn’t concern us. However each of these statements was made to us just last week (as of March 27th, at the time this article was being written).
This myopic view of the mortgage industry is so alarming that if we did not hear it (literally) every week in our conversations with mortgage brokers and small mortgage banks, we would not be writing this article. Money and success are incredibly blinding and have a way of eclipsing reality. Even if you are making money in the mortgage business today, there is a good chance you will soon find yourself out of business, unless you commit to making certain changes. These changes to your business; how you relate to your clients and how you embrace technology, will be the key to whether or not you are still in the game two years from now. Will you be a mortgage professional in the new era of lending, or will you be selling insurance at State Farm? You decide, but we may need new auto insurance so keep us in mind!
The MoRTgAge MARkeT: PARTy Like iTs 1999 AnD The LosT DecADe
In order to be successful you and your company must have value. Understanding the mortgage market; what got us here and where we are heading, is critical in order to be valuable. Anecdotal or general knowledge of what has happened (or is happening) in the marketplace is not enough. If you are going to implement change to your business, educate your loan officers and in turn, educate consumers, real estate agents and other referral partners, you need to provide them substance on an on-going basis. With so many people and other partners’ compensation tied to whether or not a mortgage closes and funds, there is a tremendous opportunity for you to be an ‘educational guide’ to the changes that have taken place and the changes that are yet to come. Here is a snapshot of a few important highlights that you need to know for your business. The goal here is to emphasize a few trends and is not an exhaustive list of what is necessary to fully educate your staff, clients and partners. If it were only that simple!
The total output of mortgage volume, including all government and conventional products, regardless of channel (broker, banker, depository etc) has dropped from 2.7T in 2007 to what is estimated to be 1.3T in 2010, as forecasted by the MBA. A decade of mortgage production has largely been wiped out; welcome to 1999 all over again! Bill Clinton was President and we were still talking about Monica Lewinsky – ahh, the good old days. The irony is 1999 was a good year for mortgages
19TheNicheReport.com
–so were the previous few years.
If you fell into a coma in 1999 and awoke in 2010, you would be eager to originate and close business; after all, closing 2 units a month is what we used to do and we were happy doing it. We were happy supporting our families on a $50-70,000 year salary doing mortgages. The ‘lost decade’ created a false ‘normal,’ making a correction in the marketplace is that much more difficult for us to embrace. It is important to note that the drop to $1.3T in total origination production is nearly a 40 percent drop from $2.1T in 2009. With the engine behind the refinance market running out of steam - according to the MBA, refinances will make up less than 40 percent of all mortgages. This is down from over 65 percent in 2009 –
and a fragile economy with 11 million borrowers owing more on their mortgage than the appraised value, we are looking at a mortgage market that will take several years to stabilize and regain production levels. Corelogic estimates that in the markets that suffered the worst of the property depreciation such as California, Nevada, Arizona, Florida and Michigan, it will be 5-7 years before positive equity is achieved. Therefore, we are looking at a 5-10 year cycle to allow for housing prices to stabilize and appreciate to a point where borrowers have equity in their home again. These market factors will stagnate and flatten growth of the US economy and the mortgage industry. For small to mid size mortgage companies less volume will make it more difficult to keep their operation up and running.
As a result of the market fallout since 2007, by the end of 2010, the industry will have lost nearly 300,000 workers and over half of the mortgage companies that were in operation. This evaporation of the industry has occurred in just two years. Given the current market related challenges, the numbers of companies and therefore ‘industry workers’ will continue to contract albeit at a slower pace. We expect another 15-20 percent contraction in the mortgage brokerage channel and further consolidation for small to mid size mortgage banks (defined as any mortgage bank under 15MM). Just when we thought the downslide was behind us, it is not. More attrition is inevitable in the mortgage brokerage and mortgage banking channels. This is not really debatable; the question needs to revolve around what should mortgage professionals do from this point forward.
The resizing and shaping of the mortgage industry will have dramatic effects on industry professionals, and how they successfully satisfy the needs of their job in the new era of mortgage lending.
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The MoRTgAge PRoFession: conTRAcTion, ATTRiTion, ReguLATion
It is important to understand that the market contraction is not isolated to the broker channel. However, the broker channel has taken quite a beating. The graph below illustrates a radical shift in channel production volume. At its peak, Brokers were nearly 70 percent of the volume while other channels – mortgage banks, depositories etc made up the remaining 30 percent. In just over 3 years, this has switched causing Access Mortgage Research & Consulting, to forecast brokers will do roughly 15 percent of mortgages and depositories and mortgage banks will make up over 75 percent of the volume nationwide. This kind of shift is reminiscent of General Motors decline from their peak production and market penetration. In 1954 GM’s market share was nearly 50 percent of all automobiles sold in the United States; other manufacturers excluding Ford & Chrysler and including the foreign competitors were roughly 16 percent. In 2010 that market share mix has largely switched. GM will do approximately 16 percent while foreign automotive manufacturers now make up over 50 percent of the market. What GM did in a generation, the mortgage brokerage channel did (or had done to it) in two years. There are many reasons behind this, and in all fairness, the political winds of change have expedited this transition. In every drama there is a villain and unfortunately mortgage brokers have been “type casted” in this role.
Broker Production Volume by Year: 1998-2010 by Access Mortgage Research & Consulting
According to Access Mortgage Research & Consulting, there are approximately 20,000 mortgage brokerage businesses left in the market as to the end of 2009. Over the next 12-16 months, this number is likely
drop approximately 15-20 percent per year to below 15,000 by 2012. There are roughly 60,000 workers currently in this origination channel according to the NMLS. This number however is largely not meaningful since many of those originators are not doing any volume despite maintaining their licenses. As a result their number is more likely to be approximately 30,000 active originators although this number is difficult to assess. Due to the market erosion over the next 12-16months, the total number of active originators could feasibly fall to below 20,000. Driving these downward trends are increased production costs, long turn times at wholesale lenders, the total cost of quality, regulatory challenges, technology and of course net worth requirements for FHA and lenders. The broker channel is considered too high risk of a channel to work with due to the lack of regulatory controls inherent in such a disparate channel. This has driven the major investors to adopt a “do it their selves” type attitude, leaving them to expand their retail operations and volume. Eventually, when the broker channel stabilizes, the market value of this channel will inevitably increase given the poor customer service and high production costs in the investor model. This will leave them with no other choice but to depend upon a lower cost origination channel; but it will be on their terms not the brokers.
We will discuss this trend of the continued attrition of the broker and small mortgage banking channels and the re-emergence of the “Super Broker,” However, it is worth noting that if you are a mortgage broker or small mortgage bank (< 10MM), it is time to do one of the following:
1) Pray.2) Join a larger mortgage bank to take advantage of
the economies of scale.3) Raise $2-3M to increase your net worth
requirements to getting and keeping your warehouse line, and getting licensed to originate FHA loans while holding your market ground.
4) Pray.If you are not religious, and do not do either two or
three, or come up with a unique way to differentiate your business, you will sadly, but likely go out of business.
Many Brokers and small mortgage banks today remind me of the families in New Orleans who refused to evacuate in the week prior to Katrina. They did not evacuate because they had survived storms before. All
TheNicheReport.com 21
they needed to do was pray, hold on, and take inventory after the storm. We know now that some storms are different than others. There are some who survived while many unfortunately did not. So the next time a “boat “comes by your business and a life line is thrown your way, I would carefully consider it.
If you decide to choose option 2 and investigate mortgage banks we suggest you consider the following:
1. Is the mortgage bank you are looking at joining currently funding under $20MM in volume?
2. Is the last time they have invested in new technology longer than 2 years?
3. Is the majority of their business (greater than 50%) refinancing transactions?
4. Are they not licensed to do FHA?If the answer to one or more of these questions
is yes, you need to seriously consider your choice and compare your options to a company that answers all of those questions no. Yes, the neighborhood watch reports are vital; and yes, reviewing a company’s financials and net worth are also very important considerations. The challenge in today’s market is balancing increased volume
and production with reduced back end costs and total operational budgets. Volume is the key to better pricing, and investing in technology has the ability to reduce overall costs.
If you are considering option 3, it means you likely have sufficient volume and consistent production, but it may be difficult to justify maintaining your independent company. Considering the economies of scale, the administrative, operational, and compliance benefits, being associated with a larger scale institution certainly need to be evaluated. The price of almost every aspect of a loan is impacted by volume. From interest rate pricing to the cost of a tri-merged credit report, the bottom line is heavily impacted by the number of transactions your company is recognized as conducting. Operating under a larger umbrella often enables you to benefit from the total production of the company.
The MoRTgAge inDusTRy: ReguLATion, TechnoLogy AnD The eMeRgence oF The suPeR BRokeR
Let us be clear, we have no desire to be Chicken Little. Think of us more like Paul Revere. Paul Revere announced that the “British are coming” nearly two years after the colonies had already setup local governances and begun the process of independence. Our message is: more change is upon us. The regulatory changes of the past 12 months and those yet to come in the next 12, will revolutionize mortgage lending. From the major lending institutions to the two person mortgage shop, the rules of the game are fundamentally different; for the future emergence of wholesale and the “Super Broker,” they have to be.
First was HVCC, then MDIA, Red Flags Rules (depending on what type on lending institution you are), TILA and Section 35 HPML requirements, HMDA changes, and of course, the new RESPA Rules. Add in a dose of SAFE Act and originator licensing/registration, mix with a little Foreclosure and loss mitigation requirements and your regulatory alphabet soup is just about complete. Oh wait…that’s just what has happened since May 2009! An important litmus test for any compliance policy is determining that your procedures satisfy both the spirit and the letter of the law. While the letter of most of the recent regulatory changes have been challenged and argued, the spirit behind them has been relatively universally supported. Protecting consumers from predatory lending practices, providing the right product to the right borrower, and putting the needs of your customer Call or email Kamau Coleman
Email: [email protected]: 310-462-4637
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- continued on page 43
above your desire to make a quick profit are all pinnacles of a career in the mortgage industry. That to us is really the future of the mortgage industry landscape.
If you want to be successful in the mortgage industry, it needs to be your career and not a part time hobby. Helping people make good decisions about their biggest asset must not be something taken lightly and should only be done by well trained professionals. The SAFE Act has made this a requirement for every loan originator in the country and that is a good thing. The key is documenting your process and then measuring the compliance of your organization against that document. This seems fairly obviously but in our experience virtually no mortgage company has done this. If you have, you are indeed in the top one percent of your peers.
So what does the future of mortgage lending look like? Clearly higher net worth requirements, annual personal credit and criminal background checks and the use of more sophisticated mortgage technologies are minimum requirements to remain in business. Revisions to the Truth in Lending Act (TILA) are underway. The Federal Reserve Board published proposed rules in 2009 and the public comment period ended 12/24/2009. While the Final Rule has yet to be released, expect substantial and extensive changes to disclosure requirements including a new TIL disclosure. How originators will be compensated and potentially even how APR is calculated and what fees are included in that calculation will also likely be changing. We also anticipate downpayment requirements will continue to increase while the availability of 100% financing products will continue to decrease. The USDA has announced their Rural Housing program is virtually out of funds and Investors have already discontinued buying loans originated under that program. FHA is under close scrutiny and Secretary Stevens – whose background is in the conventional market – continues to morph the government’s programs to more closely reflect conforming guidelines. However, FHA continues to innovate and we predict they will be relied on to help bring the industry out of crisis. These changes will contribute to the further contraction of the small mortgage banking and brokerage channels. What will be left is the Enterprise and mid size mortgage banking operations, the depositories and the emergence of the super Broker. The super brokers are those with a $1-2M net worth who embrace technology to help navigate the change in the regulatory landscape. They many times have solidified investor relationships that in effect
make them “retail extensions” of the investors. The super broker mitigates risk on behalf of the investor by ensuring the proper compliance checks, verifications, disclosures and re-disclosures are documented and completed according to investor, state and federal requirements. One thing is certain: the broker channel of 2004-2009 has largely died and the resurrection of that channel is dependant on guaranteeing the integrity of loan files and the lending process.
The RighT TechnoLogy: WiThouT iT, you WiLL sTRuggLe.
The key to the success of a mortgage operation and the rise of the “Super Broker” is staying in compliance and the adoption of technology. Staying in compliance with all the regulations requires clear and well articulated policies and procedures. Once these policies are in place, the focus shifts to implementing them and validating how well your organization can measure itself against its established processes. In today’s environment, a mortgage company needs state of the art technology and you must be willing to pay for it. Technology either enables or undermines an organization. The loan origination platform is the hub of the transaction. A mortgage company will struggle and feel the regulatory pain most acutely if it has not invested in updating or replacing its loan origination platform. Here are some critical requirements to look for when shopping around:
• AutomatedandcustomizableManagementandControl
• AflexibleRulesBasedEnginewithAlerts,Triggers,Hard and Soft Stops
• EmployeeandRoleBasedrules&workflow• LicensingvalidationandTracking(bothforinitial
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5-2010 Niche 1/8 ad.indd 1 3/26/10 11:39 AM
24 May 2010
Two of FNMA’s recently communicated -- Loan Quality Initiatives (Announcement SEL -2010-01 March 2, 2010) validating borrowers’ SSN/ or
Tax Identifications and Confirming Undisclosed Liabilities -- seem daunting but only require a little more under-standing for originators to navigate without concern. The key is in understanding what FNMA is after, how existing tools can help, and then knowing how to escalate should existing data or results prove insufficient.
Bottom line, it’s not as tough as it sounds.First, let’s review FNMA’s SSN/Tax ID validation
request. Simplifying the new LQI requirements, the originator
must essentially check four elements of a borrower’s SSN: 1) its basic format2) whether it has been legitimately issued3) whether it is a deceased person or 4) whether the issue date is inconsistent with age The good news is that Social Security number use in
connection with credit reporting is so pervasive that all three bureaus offer reputable and accurate sets of fraud alerts to assure that your borrower is properly connected to the SSN provided. To be specific, in combination, the three bureaus offer 31 fraud alerts triggered off the borrower’s SSN, and most are specific to the issues raised by FNMA. A comprehensive reference by bureau can be quickly accessed at:
http://www.informativeresearch.com/Products/Fraud_Alert_Detection.html#Fraud_Lists
Job one then, is simply to make sure the originator has at least one of these fraud alert product sets -Transunion’s High Risk Fraud (formerly HAWK), Experian’s Fraud Shield or Equifax’s Safescan - included on the credit reports. Two sets of alerts (from separate bureaus) are preferred and are an inexpensive best practice to assure that identity risk is minimized.
Important use facts (and limitations) for bureau alerts and SSN validation:1. The bureaus’ fraud alerts are only as good as the
number of creditors contributing to that borrower’s report. The fewer the number of creditors on the file, the fewer the data points you will have to validate a borrower’s identity attributes definitively. “Thin files” (those having 5 or fewer creditors reporting) will require more care, review and possible escalation.
2. The creditors’ reported raw data is rarely ‘verified’ as being true and accurate, meaning, that, for example, Macys’ best efforts to report data is unlikely to include a verification of the SSN it is reporting. Therefore, the validity derived from a credit report is essentially driven by consensus and corroboration from amongst all the reported creditors:a. For example, the trace data section of the credit
report may indicate… “56 times the SSN 012-34-5678 was reported as connected to John Doe” and that “2 times the SSN was 013-34-5678.”In this case, a 97% consensus is pretty strong validation especially given the absolute number (58) of reported SSN connections to Mr. Doe.
By BRAD keLso
Simple Insights on two of FNMA’s Loan Quality Initiatives Can Save Repurchase Risk
Fearing FnMA’s new Loan quality Red Flags?
NicheReport.indd 1 12/10/09 8:43:00 AM
Note too, in this case it’s pretty obvious that the alternative SSN’s reported were simple input errors – one digit off – a fairly common issue.
3. Good News: There is absolutely no debate or second guessing for TWO of the bureau alerts!a. ‘SSN not issued’ (All bureaus have definitive
checks against the SSA’s master file of SSN issued numbers)
b. ‘SSN is associated with a deceased individual’ (same)
4. What about ‘SSN Issuance Date inconsistent (prior to) reported DOB’? This alert will require some secondary assessment by the creditor.a. The bureau is able to compare the SSN issuance
date with the reported DOB of the borrower and issues a warning of any dates that look “odd” BUT, here again the quality of the reported DOB’s coming from the creditor is historically weak and as with SSN itself, not typically verified by the creditor. Consequently, this message is a good warning that effectively requires escalation.
b. Fortunately, the SSA (via SSA Form 89) offers a
definitive means of verifying a Borrowers’ DOB in connection with the SSN. This form requires signature by the borrower and acts just as an IRS Form 4506-T does for income tax filings, in granting authorization to check the authoritative records. Once armed with the definitive DOB in combination, this obligation under FNMA’s LQI is easily mitigated or identified with authority.
5. ITIN validation/a. The bureau alerts do not today address ITIN,
therefore, validating these must be done through a 4506-T request of at least the prior year tax forms or W2’s associated with the borrower.
Secondly, let’s review FNMA’s basics regarding Undisclosed Liabilities.
Here the requirements have been presented more vaguely and yet by subsequent discussion and research can be boiled down to two straightforward requirements: 1) Determine that any and ALL liabilities that could tangibly affect the future repayment of a new mortgage are disclosed; and2) That all previously disclosed credit inquiries are researched to assure they have not become new tangible liabilities prior to close.
Practically, the best way to assure both situations are mitigated begins with ordering a new credit report not greater than 10 days prior to the close of the loan. This practice would most likely manifest either of the two issues; a new credit relationship whose repayment terms tangibly impact the underwriting or a change in indebtedness (increased balances) with existing creditors.
Important use facts (and limitations) for meeting undisclosed liabilities:1. FNMA’s threshold for re-underwriting a DU case file
expressly refers to changes in debt payment minimums that exceed 2% of the qualifying income. Payment changes below this percentage should be disclosed, but should not require re-underwriting the casefile.
2. FNMA has expressed that a new credit report must be within 10 days of the close of the loan. Credit reports older than that will not adequately meet the timing.
3. Commonly, most credit reports offer a balance summary section that will allow you to quickly compare a change in overall debt balances BUT, as FNMA’s focus is on minimum payments, the total debt payment threshold will have to be recalculated. The rationale being that creditors’ payment terms vary
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especially on revolving debt. Similarly, large increases in balances on home equity lines may not necessarily increase payments as dramatically as revolving debt.
4. At this time, potential changes in FICO scores are not included in the LQI however, and potential ‘newly’ returned middle scores below 620 would likely be a red flag as it falls below the floor for conforming lending.
5. For following credit inquiries shown in the initial credit report, the timing of a second credit report may not necessarily have allowed enough reporting time to pass (bureau reporting is done in 30-45 day cycles) to have captured a new indebtedness. Consequently, originators seeking complete insulation from repurchase risk should be prepared to follow-up by phone with any of these inquiries based on additional discussion at the time of application and review with the applicant.
6. The applicant should be thoroughly screened prior to signing the 1003 application for the possibility of undisclosed liabilities that are not being reported through the credit bureaus. The reality is that such indebtedness is quite common and the credit report cannot be relied upon as the sole source for identifying this issue. In fact credit reports only reflect those creditors who subscribe and many creditors are too small. Examples of common unreported liabilities include: local/small trade retailers (jewelry, grocery), Rent-to-Own operations, private automobile financing, or medical repayment agreements. All of these must be included by active inquiry and unfortunately are not easily identified or verified by automated means.Don’t be intimidated by the new LQI Initiatives.
Understanding the LQI requirements for SSN validation and undisclosed liabilities will allow you to address them fairly simply with tools that are readily available to you.
Brad Kelso is the Executive VP, Sales and Marketing at Informative Research, with a cumulative 22 years in financial services. Prior to joining Informative Research, Brad led Countrywide’s credit fraud initiatives and system development efforts with credits as a national expert and speaker on Authorized User Score Fraud. He is the primary architect of two products related to identity fraud for the mortgage industry. Brad can be reached at (800) 473-4633 ext. 150 or e-mail [email protected]
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One of our primary jobs hosting the TBWS Daily show is to constantly have our thoughts focused on industry related news. We spend so much
time in real estate news that news has become a surrogate relationship. Upon waking, our first thoughts are yester-day’s articles and upon going to sleep our last thoughts are of tomorrows stories. We know that does not speak well to our priorities, but what is truly disturbing is the relationship we are speaking of is less like Ward and June and more like Ike and Tina. You see, you do not have to go far to learn about all the horrible things that have happened with our wonderfully dysfunctional real estate industry. Foreclosures are out of control with no end in sight, unemployment is through the roof, and just a few weeks ago David Stevens, the FHA commissioner, said Washington blames our industry for bringing the global economy to the brink of a Depression and it is their job to fix the problem. It is enough to make you want to jump off a bridge or at least seek gainful employment elsewhere. I think the attrition we have seen amongst the numbers of originators is not only due to our industry meltdown but also due to our mental meltdown. So what can each and every one of us do to beat the doom & gloom and find a "happy spot?" The answer is simple, do not focus on the negative and find what is good. Hey, it worked for Tina it can work for you.
So what is positive? RE Barcamps are positive. We
recently had a chance to attend Seattle's Pacific North West Summit and RE BarCamp. BarCamps began as an impromptu gathering of Real Estate agents meeting at a Bar to have drinks and discuss effective strategies and applications for their business. You can imagine in 2007 and 2008 very little was working, so they had their work cut out for them. I guess the participants found value because these meetings continued, got larger, spread across the country and slowly morphed into events that focused more on value and less on booze. The BarCamp we attended in Seattle had over 500 Realtors and Lenders working together, sharing their ideas. We were brought in to discuss video marketing and we left better equipped to market our show. You see, BarCamps do not have speakers in a conventional sense where "I speak, you listen" and at the end you hopefully buy my product. Nope, BarCamps are structured like a conversation. Sure we began the discussion but participants in the room shared ideas and applications that we will surly adopt on our show. Speakers are determined the day of the event and are chosen by the attendees. You figure out what you want to learn about then find the person or people that have already adopted and succeeded with the idea and application. The speakers are then placed on a checkered grid that spells out the Time, Topic and Location of that forum. So attendees actively determine what they are going to learn and their level of involvement.
BARcAMPs - WhAT They ARe AnD Why you shouLD go
By FRAnk gARAy & BRiAn sTevens
28 May 2010
BarCamps are a new philosophy around real estate events. The days of high cost events are over. Originators that are having a hard time making their house payment do not have the resources or time to learn how to climb pyramids to become super originators, and they surly do not want to hear it from people that are so far removed from loans they probably could not fill out a 1003. BarCamps are intended to make people better not make event coordinators richer. BarCamps are generally free or have a modest cost associated with covering the events overhead. With our example in Seattle a modest cost associated with the Summit was used in combination with a few sponsors to completely cover the cost of the BarCamp. That’s right, it was free. Further proceeds from the sale of morning coffee and snacks were given to a local charity. An event truly designed altruistically for benefit to the attendees and their reputation. As we said earlier, considering the fact that our industry is largely blamed for our little global meltdown, any goodwill is badly needed and appreciated. So donating proceeds to these charities benefits the reputation of all of us in the industry.
OK, so we are assuming the vast majority of you who read The Niche Report are Originators and at this point we may have, hopefully, convinced you to seek out and attend a local BarCamp. We are sure you will learn something that will help you with your business. If you are one of three super lending eggheads that just know everything there is to know about your craft then you can help others and dazzle them with your intellect. Try it you will feel better about yourself. The event is not going to cost you much if anything and there is a good chance that the fees associated will land in a charities pocket. Consider the cost as professional goodwill that we can all use to get the egg off our faces for the subprime
melt down. And finally, here's the kicker. Lets assume nothing we said resonates with you... nothing at all, if you attend a ReBar event you are going to surround yourself with hundreds and hundreds of super motivated forward thinking successful Real Estate Agents that want to hear your message. Oh, and very few if ANY lenders will be in attendance. That's right! Your competition is not attending these events. Now if the undivided attention of hundreds of agents, and learning about new technology, and helping a local charity doesn’t get you excited, always remember, WalMart is looking for new greeters and I’m sure you will look dazzling in a powder blue vest.
Thinkbigworksmall.com (TBWS) was founded in 2007by a group of highly successful real estate and mortgage industry entrepreneurs. Born in the most battered market in the real estate and mortgage industry's history, Thinkbigworksmall.com was conceived after decades of observing how the most successful professionals always seem to work smarter not harder. Frank & Brian can be reached at [email protected]
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Remember when home values were rising and cash-out refinancing made sense for homeown-ers. However, as home values began to decline a
new trend emerged, one that mortgage brokers and loan officers need to be prepared for today when working with borrowers on a refinancing transaction – and that is a cash-in refinancing .
A cash-in refinancing is when a borrower brings additional cash to a refinancing in order to reduce the amount they owe on a mortgage for a variety of reasons. This is not a new concept, but it has become increasingly common since home values started to decline in 2005. It is estimated by the Federal Reserve that homeowners lost nearly $7 trillion in equity between 2005 and 2009.
Although complete data is limited, according to a news report by Ken Harney, Freddie Mac reported that 88% of all refinances were cash-out in mid- 2006 (with a mortgage balances increasing at least 5%), while only 5% were cash-in. But by the fourth quarter of 2009, approximately 33% of refinance were cash-in (the highest ever), while only 27% of refinances were cash-out.
With this data, I spoke with John Walsh, President of Total Mortgage Services , a leading mortgage lender and broker that just launched TMS Funding its wholesale channel, to get a lender’s perspective on cash-in refinancing. John mentioned that Total Mortgage Services has experienced an increase of over 250% in cash-in refinancing year over year
from 2008 to 2009 and well over 600% in the 2006-2009 time period.
According to John, the primary reasons for cash-in refinancing at Total Mortgage Services are:
1) Improve the borrower’s debt-to-income (DTI) ratio to qualify for refinancing at a lower current mortgage rate .
2) Improve the borrower’s loan-to-value (LTV) ratio in order to avoid paying for private mortgage insurance.
3) Improve the borrower’s LTV ratio in order to qualify for a government refinancing program such as the Homeowner Affordability Refinance Program .
4) A good investment in the current low interest rate environment.
In addition, John believes the implementation of the Home Valuation Code of Conduct (HVCC) ensures that cash-in refinances will continue to be a large part of refinancing. The HVCC has had significant impact in the way homes are valued. There is more regularity in the appraisal process and the mortgage industry has seen increased uniformity in home values. There has been substantial downward movement in home appraisals, which reduces the equity borrowers have in their home and causes more borrowers to bring cash to improve their LTV or DTI.
John added that obviously borrowers are not thrilled
cAsh-in ReFinAnces: A TRenD To WATch in 2010
By John LovALLo
FRoM The BLog
30 May 2010
FRoM The BLog
to have to bring new funds to the closing table. But it is clear to him and to borrowers, that in this low interest rate environment, even when a borrower adds cash to the refinancing, the economics favor the borrower in a meaningful way over the long-term. For a quick estimate on the benefits, John suggested a calculation be done through Total Mortgage Services’ Cash-In Refinancing Calculator .
For mortgage brokers and loan officers looking to close more mortgages, cash-in refinancing present an ongoing opportunity, but just as important, a chance to put a borrower in the right loan at the right time.
John Lovallo is the President of Lovallo Communications Group, a five year old public relations firm with extensive experience in the mortgage and real estate sectors. John founded Lovallo Communications Group to create a principal to principal, strategic and account management experience for each client that delivers tangible results. Prior to starting his own firm, John held practice leadership positions at Ogilvy Public Relations Worldwide, Weber Shandwick Worldwide and Makovsky & Company. If you have a comment or a question for John, please contact him at [email protected] or 203-431-0587.
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Realtors and appraisers are familiar with today’s definition of fair market value as something along the lines of
the most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
Some realtors and appraisers may also remember when the Appraisal Institute (originally American Institute of Real Estate Appraisers) was an affiliate of the National Association of Realtors.
hisToRyBefore the Savings and Loan Crisis of 1986, fair
market value was defined by the National Association of Realtors (NAR) and the lending industry, was the “highest price” as the expected standard.. This was a time of high interest rates and inflation. In 1980, the Depository Institutions Deregulation and Monetary Control Act was created after $700 billion was spent in 1976 and $1.5 trillion by 1980. In 1986, the Tax Reform Act (26 U.S.C. 469) was enacted. In 1989, the Financial Institutions Reform, Recovery, and Enforcement Act,
also referred as FIRREA or the Savings & Loan Bailout Bill, created appraisal licensing via Title XI, the Appraisal Foundation and its two independent boards, the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB). Certificate of Deposit’s were not insured by the FDIC and large banks, , the ASB drafted the Uniform Standards Policies and Procedures (USPAP) as further guidance and regulation and establish public trust. After multiple bank closures such as Lincoln Savings and Loan, the Resolution Trust Corporation filtered through assets. To protect the banks in the future and lower lender’s risk, the National Association of Realtor’s definition of fair market value also changed. Following April 30, 1990, the Appraisal Institute also became its own entity and separated from the NAR.
Did anyone see the deceptive practices after the lessons of the last cycle, from the 1980’s onward? With the investment banking sector not regulated as intently, questionable AAA bond credit ratings for packages caused by subprime loans were the components contributing to the perfect storm that saw the real estate bubble burst and the almost complete collapse of the global economy. These included bad loans, derivatives predicting risk, insurance being sold against this risk and investors relying on these false AAA ratings, combined with the toxic meltdown. Seeing their market share and profit margin
An exAMinATion oF FAiR MARkeT vALue vs. ReAL vALue
By AngeLinA cARLeTon AnD Ron WRoBeL, ceRTiFieD APPRAiseRs
APPRAiseR sounD oFF
32 May 2010
APPRAiseR sounD oFF
decrease, Fannie Mae and Freddie Mac soon subscribed to the same questionable lending practices as did the investment banker in the private sector.
In light of economic crisis that began in late 2008, what lessons will our nation learn from this crisis, beyond any moral and ethical reconsideration? What legislative steps will be taken to regulate an industry that seems to have gone awry? Or hopefully protect the American tax payer from future “necessary” bailouts to preserve corporate entities deemed “too large to fail” who themselves engaged in risky behavior that put them in position to do exactly that, fail.
DichoToMy oF FiDuciARy DiFFeRences With the Realtor bound to the seller to obtain the
highest price, the appraiser interest to protect the lender’s exposure especially in a declining market, the difference can sometimes be (5-10%) of a differential. The Realtor could state that a single family residences’ highest value is $600,000 (maximum high for client interest) by way of fair market value under which the realtors operate. Subsequently, the appraiser could value the same property at $575,000 as the most probable or the mid-range given the same comparables. The lender could still perceive the fair market value to be lower, for example, if the appraiser classified the geographical market as a “declining neighborhood” on the URAR form. These are examples of competing interests that often lose sight of the supposed independent role of an appraiser and can often force him or her to have to serve multiple masters.
An example of the competitive nature of the once booming mortgage market and its impact on lender’s practices can be taken from mortgage giants, Fannie Mae and Freddie Mac. In the past, these entities declined lending to a would-be property owner if the parcel they
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market) being a down market, values are expected to drop
further due to unemployment. After subprime mortgages
defaulted upon their rates resetting and with two income
households becoming one income households (continuing
high unemployment rate) with limited savings in the bank;
lenders may continue to remain cautious with hopes of
preserving equity if values do dip again.
Angelina Carleton is a principal at Carleton Appraisal
Services as well as a commercial broker with NAI Capital.
Professional training has been through CCIM, CCIPS, the
Urban Land Institute and the US Green Building Council.
Angelina can be reached at [email protected]
Ron Wrobel has been established in the area since 1982 as
a professional commercial and residential real estate appraisal,
sales, advisory, and consulting firm. Ron can be reached at
sought ownership was in a neighborhood deemed to be in decline. However, with the increase of mortgage products made available to consumers via the private sector, Fannie and Freddie decided to relax the neighborhood requirement in one example to remain competitive. It has been speculated that Fannie and Freddie continue this practice to this day as a way of promoting first time home ownership to an American public that still finds itself mired in a continued credit crunch, thus making it almost impossible to obtain financing.
FuTuRe vALue DiscRePAncies With the last two real estate cycles requiring the need
for lender oversight and appraisal regulation, the future velocity of sales, borrowing and appreciation will eventually return. However, the logic behind setting and accepting a property’s value, whether a down or an up market, will continue to carry concern between the interests of the principals and the financial investors lending the funds. 1996 to the second half of 2007 was an up market. 2008 to today (depending on the neighborhood or micro-
March 2010, The 2009 Year End Review for Quality Control made its debut in the mort-gage industry. Even though there is more data
that could be analyzed and discussed, I will stay focused on a few areas.
How did the industry do when comparing FHA against Conventional loans?
With all the buzz regarding FHA defaults and other problems, overall the loans are looking excellent. The FHA loans improved in the “Excellent” risk ranking by 145percent. Even though conventional loans had a higher number of “Excellent” loans they only improved 45percent as compared to the FHA loans. This is significant for the retail and underwriting areas of the loan process because the mortgage industry made giant steps in a positive direction resulting in a lower risked loan for everyone.
The “Excellent” FHA loans had an average credit score of 697 and ratios of 25/38. The Conventional “Excellent” loans had an average credit score of 768 and average ratios at 24/32. The Conventional average credit score and ratios may explain why 41percent of conventional loans rank “Excellent” where as FHA only has 19percent.
Another positive note is how the industry did an outstanding job in improving FHA loan quality in the “Poor” risk ranking by reducing the number of “Poor”
loans 66percent. The loans that are ranked in the “Poor” category are loans that should not have been made. Conventional loans on the other hand saw a jump of 35percent in the “Poor” category.
The 2009 Year End Review for Quality Control has the top 10 quality control categories that list the ranking of where these loan types improved and fell short.
FHA loans saw significant shortfalls in the category “FHA Underwriting for Brokers”. Even though this category ranked 10th out of 10 categories and made up of 5.5percent of the total problems areas there was a 285percent increase from 2008. The conventional loans saw a 131percent jump from 2008 in the category “Underwriting Discrepancies”. Underwriting Discrepancies ranked 9th out of 10 categories and had a slightly higher percentage of 6.04percent compared to FHA which ranked 5.5percent.
FHA saw a 30percent increase in problems in the category of “Application 1003 Final” where conventional loans saw a 4percent increase in problems in the same category. The difference is “Application 1003 Final” ranked 4th for FHA at 10percent of the problem areas and conventional loans ranked 2nd with 14percent. FHA statistics are better and perform lower than the conventional rankings to the overall total number of problems.
Since appraisals have been a point of contention
35TheNicheReport.com
quality control: The 2009 year end Review
By ToMMy DuncAn
Mortgage stats for mortgage geeks (a good thing)
with many in the real estate finance industry, I thought I would take a look at it. FHA actually made improvement as compared to 2008 in the category “Appraisal FHA”. FHA improved by 18percent where as conventional appraisals took a step backwards in the category “Appraisal Original” by 56percent from 2008. Even though FHA made noticeable improvements with “Appraisal FHA” it did have a higher overall percentage at 10percent ranking 3rd with the most problems as compared to the conventional loan category “Appraisal Original”, at 8percent ranking 7th. I must mention there is another appraisal category seen only on the conventional side called “Appraisal DU”. Conventional loans saw a 30percent improvement from 2008 and ranked 8th with a total of 7percent problems with this category.
How do these numbers translate in the scheme of things?
The bottom line is the industry has improved in sending to the secondary market a better loan. Remember earlier we discussed risk. The risk is based on long term
loan performance and the likelihood of the loan being paid or making it to a full term. A healthy loan is what keeps loans funded and provides the lender the ability to underwrite and fund more loans as the originators generate the business. Even though there were problems found during the QC process. The findings or categories are there to help the industry, production managers, and QC departments focus in areas that can be improved upon making the loan process stronger and more durable. What I did not mention in the forum was all the other improvements. Unfortunately, I only focused on the problems with the larger numbers. The 2009 Year End Review for Quality Control is available to anyone who is interested. Go to http://www.qcmortgage.com/UniversalReport.aspx or if you want to see how banks and non-banks compared go to: http://www.qcmortgage.com/BankRiskReport.aspx
Tommy A. Duncan is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at [email protected].
E X P R E S S
3 Nice Bedrooms2 Full BathsBright KitchenFamily RoomCentral A/CCozy FireplaceOpen Floor PlanBig Back Yard2 Car DT-Garage
This financing is designed to assist you in selecting the loanprogram that most closely suits your budget.
Financing is shown for comparison only. This is not an offer ofcredit or commitment to lend. Loans are subject to buyer/propertyqualification. Rates/fees are subject to change without notice.
Total Cash Required may include prepaids/impounds, not cashreserves which may be required for some conventional loans.
Total Payment may include taxes, insurance & mortgage insurance for loans when required, but does not include HOA.
APR shown is for 1st loans only. 2nd loans do not includeprepaid finance charges. A full disclosure of your closing costs,including the APR, will be provided when you select a financingprogram and negotiate the purchase of a home.
$400,000
Bob Smith, Senior Mortgage ConsultantOffice: 888.555.1212 Cell: 800.123.4567 Email: [email protected]
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888.123.4567 www.JenkinsTeam.com
Family Oriented Floor Plan & Park Like SettingBeautiful New Mediterranean Style Home
Finance Cnv Fxd Cnv Fxd Cnv Fxd Cnv Fxd Cnv FxdNotes Fxd 100% 5/6 ARM Fxd Pmt 1%ByDn Fxd Pmt% Down 0% 0% 3% 10% 10%First Loan $400,000 $320,000 $388,000 $360,000 $320,000 Term 30 Years 30 Years 30 Years 30 Years 30 Years Rate 6.250% 5.625% 6.000% 5.250% 6.000% APR 7.042% 5.819% 6.773% 6.597% 6.175% P & I $2,463 $1,842 $2,326 $1,988 $1,9192nd Loan N/A $80,000 N/A N/A $40,000 Term N/A 30 Years N/A N/A 30 Years Rate N/A 10.500% N/A N/A 10.750% Payment N/A $731 N/A N/A $373Down Payment $0 $0 $12,000 $40,000 $40,000Closing Cost Est $14,238 $11,763 $13,041 $11,648 $10,838Seller/Lender Pays $0 $0 $0 $0 $0Total $ Required $14,238 $11,763 $25,041 $51,648 $50,838Total Payment $3,004 $2,814 $2,855 $2,323 $2,522
This financing is designed to assist you in selecting the loan
program that most closely suits your budget.
Financing is shown for comparison only. This is not an offer of
credit or commitment to lend. Loans are subject to buyer/property
qualification. Rates/fees are subject to change without notice.
Total Cash Required may include prepaids/impounds, not cash
reserves which may be required for some conventional loans.
Total Payment may include taxes, insurance & mortgage
insurance for loans when required, but does not include HOA.
APR shown is for 1st loans only. 2nd loans do not include prepaid
finance charges. A full disclosure of your closing costs, including
the APR, will be provided when you select a financing program
and negotiate the purchase of a home.
Bob Smith, Senior Mortgage Consultant
Office: 888.555.1212 Cell: 800.123.4567 Email: [email protected]
1234 Main Street, Hometown, USA 92869 ~ Licensed Mortgage Broker
Mary Jones, Real Estate Agent
800.123.4567 Cell 2322322
Family Oriented Floor Plan with Large Private Park Like Setting
Beautiful New Mediterranean Style Home
Finance
Cnv Fxd Cnv Fxd Cnv Fxd Cnv Fxd Cnv Fxd
Notes
Fxd 100% 5/6 ARM Fxd Pmt 1%ByDn Fxd Pmt
Sales Price$400,000 $400,000 $400,000 $400,000 $400,000
% Down
0%0%
3%10%
10%
First Loan$400,000 $320,000 $388,000 $360,000 $320,000
Term
30 Years 30 Years 30 Years 30 Years 30 Years
Rate
6.250%5.625%
6.000%5.250%
6.000%
APR
7.042%5.819%
6.773%6.597%
6.175%
P & I
$2,463$1,842
$2,326$1,988
$1,919
2nd Loan
N/A $80,000N/A
N/A $40,000
Term
N/A 30 YearsN/A
N/A 30 Years
Rate
N/A 10.500%N/A
N/A 10.750%
Payment
N/A$731
N/AN/A
$373
Down Payment
$0$0 $12,000 $40,000 $40,000
Closing Cost Est$14,238 $11,763 $13,041 $11,648 $10,838
Seller/Lender Pays$0
$0$0
$0$0
Total $ Required$14,238 $11,763 $25,041 $51,648 $50,838
Total Payment$3,004 $2,814 $2,855 $2,323 $2,522
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Equal Housing Lender. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to lend.
Call Me Today.
It could be, if...•
•
•
•
Is now the right time to refinance?
Your adjustable rate mortgage payment is increasing
You want to consolidate monthly debt such as credit
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and you want a lower payment.
You want to “cash out” equity to use for college
tuition, vacation, or home improvements.
As a mortgage professional, I have
helped many different types of people
with many different needs. Together,
we can discuss your situation and see
if now is the right time for YOU to
refinance.
Your Name Here, Senior Mortgage Consultant
Office 888.555.1212 | Cell 800.123.4567 | [email protected]
1234 Main Street, Hometown, USA 92869 ~ Licensed Mortgage Broker
Equal Housing Lender. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to lend. Consult a professional Tax Advisor for complete details.** A step up buyer is one who has owned the same home for 5 consecutive of the last 8 years.* A first time homebuyer is a buyer who has not owned a principal residence in the past three years.
Call me for details.
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38 May 2010
Lapse in the nationaL FLood insurance programIf you had a hiccup with a closing due to Flood Insurance being unavailable, you were not alone. For whatever reason, Congress has been extending NFIP for short intervals -- the next expiration is within 30 days or March 28, 2010.With Congress acting the way it is, the lapse could easily happen again.
Freddie using Loan prospector to improve appraisaL QuaLity using home vaLue expLorer® Freddie enhanced Loan Prospector (on 2-28-10) to provide a point value estimate from Home Value Explorer® (HVE) free of charge for LP users. The HVE point value estimate should be used to identify appraisals that may need additional review. The HVE point value estimate is not a substitute for an appraisal and Sellers are instructed to follow all appraisal best practices outlined in Bulletin 2009-18.
LP will provide feedback messages indicating HVE Variance and Confidence Level. Greater than 20percent HVE variance will require you to –
• Escalatetheappraisalforreviewbyseniorunderwriterorin-house appraiser
• Obtainarevieworsecondappraisalandreconcile• Rejectthesubjectappraisalifitisdeterminedthatthe
appraisal is unacceptable
So the question is – How many loans are going to fall into that “Greater than 20 percent variance” category? I do not know off hand, but I would think it is going to be common…and then what? Is your senior underwriter going to obtain a second
appraisal? Yuck. Just another day in paradise!
Fannie Brings post-cLosing reviews to pre-cLosing auditing – introduction to Loan QuaLity initiative or LQi For short! This is a major change for the industry and will affect every aspect of the loan origination and delivery process. Coaching your borrowers is more important than ever. Make sure no one is out there getting additional credit during the process – it will stop your loan in its tracks. Here’s the shortened version of what you’ll need to do before you close.
• ConfirmBorrower Identity• VerifySocialSecurityNumberorIndividualTaxpayer
Identification Number• DUREDFLAGS• Confirmallpartiesmeetcertainqualifications• DeterminationALLdebtsareconsideredinqualification• IDofpropertyunitnumber• CalculationofLTVratios• ManualUnderwritingRWC/IV loans
Fha new construction document reQuirements pLus certiFicate oF occupancy eQuivaLency detaiLs –HUD held a webinar about this, so you won’t find a ML. They clarified the documentation required in lieu of a Certificate of Occupancy (C of O) in areas where the local jurisdiction does not provide them, was reviewed. A little extra detail was offered beyond what is in the guidelines so I am passing it on. Check list available to subscribers.
So the rule & regulation changes have slowed down a little bit (from 17 last month, to 13 this month) but they are still coming at us fast and furious! Read the condensed version of just a few and take a test drive for $1 for 7 days at www.MortgageCurrentcy.com
One more thing, check out the Mortgage Talking Points® called “Rules for Dropping Mortgage Insurance.” Distribute to your real estate agents and clients.
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hud teLLs Loan correspondents to “hoLd oFF” on their audited FinanciaL statementsMany loan correspondents will get caught in a timing fiasco as they will not want to lose their ability to do FHA loans but will have to pay fees to retain an approval they won’t have much longer. Then they will be scrambling to find a lender to accept them into the "fold" (which may still require audited financials) in order to continue originating FHA loans. Tough stuff and its really frustrating.
Written and contributed by Karen Deis of Mortgagecurrentcy.com. Provided monthly by www.MortgageCurrentcy.com - Interpreting the Rules and Regulation Changes for loan officers, processors, underwriters and owners/managers. Mortgage Talking Points ™, charts and checklists included.
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The ability to gain knowledge is everything. Knowledge is power. Power is dominance.
Dominance is success. To some, this may sound
egotistical. Or the idea of power and dominance is militaristic and there is no room for this thought-train in
mortgage or real-estate. In my opinion, if you do not play to win, then do not play!
Knowledge is the foundation of success in any pursuit in life; my opinion. The more you know, the better armed you will be to succeed. After knowledge is execution of ideas learned, then the perfecting of the execution and finally the replication of the process for all activities you engage in life. I want to start with the ability to gain knowledge through questions.
In mortgage specifically, we ask questions to find out what are the needs of the customer and to establish a product that will fit those needs the best. In any profession, the general concept is true but services and products to be offered will change. The power of a well stated question is as important as a top attorney at a trial. The quality of the words used in a question will shape the answer you receive. And depending on the information you need to be successful, you need to shape your questions very carefully.
In my opinion, there are three types of questions: a fact question, a feeling question and a psychological question. Each question type has a single purpose; to
focus the “need” and to establish the relevance of the need. In sales, there is always a need. If there is no need,
there is no reason to buy goods and services. I need to eat, therefore I buy food. I need to drive to work, therefore I buy a car. The free market concept kicks in with the decision process of the customer. The process ends when the decision of where or from whom the purchase will transpire. Questions answered will drive the decision. So, how quality and specific are your questions to drive sales to your shop?
Three question types and a general description of each:
1. Fact Question – One short answer or single word answer; what is the issue, what is the customer’s need.
2. Feeling Question – One short answer; no ‘right’ answer; how does the customer feel about the scenario?
3. Psychological (emotional link) Question – an extended answer; what is the significance of this solution? What are the implications of the contemplated action?
A fact question is as it sounds; fact… nonfiction. You ask the question, “What color house do you want?” and the answer is fact: yellow. You ask the question, “How much income did you have for 2009?” The answer is fact: nothing. These questions are extremely important. Ask lots of these questions to know the customer.
Based on the answers of the fact-based questions, you can ask some “feeling” questions. These are basic emotional based, or esthetic type questions. Basic
TiP oF The MonTh
By sTeWART MeDnick
Questions
TiP oF The MonTh
TheNicheReport.com 41
TiP oF The MonTh
emotions are the initial reactions you see in public: happiness, anger, frustration, etc.
“Why do you want a yellow house?” the answer is esthetic: “Yellow is pretty.” “Are you satisfied with making nothing in 2009?” The answer is esthetic: “No, but I was on unemployment and got a part time job, it is cool.” These answers give you an opinion based on the ‘wiring’ in the head of the client. These questions focus on basic emotions, favorites, and desires.
The last type of question is psychological. The answers for these questions are formulated deep in the psyche of the mind. These answers have profound roots in the past of one’s life. These answers conjure images based on powerful memories and traumatic events.
“How do you feel owning a yellow house?” the answer is emotional: “I grew up in a yellow house and it reminds me of happier times before my dad passed away.” “I suppose it was difficult making nothing in 2009?” The answer is emotional: “No, I was laid off and the industry fell apart and I can not find another job and have been looking for eight months. I am going crazy if I can not
find another job soon.” These questions will reflect the soul of your client and are very powerful. If you listen to the facts, you can assess the needs of the customer and ask these questions to hone in on the core of the customer’s reason to be in front of you.
Two styles of questioning will determine the actual length of the answer and the depth of the facts:
1. An Open Question – uses a general line of questioning to probe for information; requires an explanation.a. Encourages a customer to open upb. Effective in the beginning of a phone call or
interview
2. A Closed Question – asks for specific facts and detail, or can be answered with yes or no.a. Helps narrow the problem and find a catch pointb. It may not encourage the customer to talk if
followed with open questions
The style of question is self explanatory and matches with the type of questions described above.
“People will flood you with ideas if you let them.” To regain the posture of the trusted advisor, you need to gain trust and show genuine desire to know the customer. If you perform well with questions, you will easily do all this and more. How you ask the question and the listening ability to glean information from answers is equally important.
The simple man asks, “How do I learn?” The wise man asks, “What should I learn?” The successful man has no time to ask, he is learning by doing.
Questions have their time and place. Ask the right questions to unlock your future success. Know when to ask, and know when to act. But, act only when you have the knowledge to move forward with confidence.
Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, personal empowerment, customer satisfaction, marketing and sales techniques. Stewart is available for marketing consulting, personal coaching and training sessions. If you have a comment or a question for Stewart, contact him at 651-895-5122 or [email protected]
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If you or your company is using the same software it has been using for 15 years, it is important you consider the following: In the new era of lending, with so many regulatory changes affecting how you take a loan application and issue disclosures; that dictate when you disclose and how you document a mortgage transaction, would you not expect your origination platform to embrace and accommodate those changes? With all of the rules, tolerances, disclosures (re-disclosures) and time dependent requirements on a single loan application, you are only accelerating your exit of the industry by refusing to make changes. Some vendors have been effective in meeting the demands of the industry and are currently growing and thriving. Other vendors have already left the industry because they did not make the right investments in technology and research, or because they failed to adequately satisfy the serious needs of the market.
When choosing a technology vendor, you need to be very cautious in your decisions. In a contracting market with far fewer buying customers then there were three years ago, the number of mortgage technology companies left in the business have increased. With a rapid decline in users and customers, mortgage technology firms have been forced to cut sales, marketing and infrastructure related costs, which also includes software development. The result is the frustrating reality many companies are experiencing today; slow to no response from legacy technology vendors who tend to react to regulatory changes after it’s too late. Their ability to meet customer and market requirements at such a fast pace becomes virtually impossible and this process becomes worse the more their customer base
shrinks. Technology companies need to be capitalized well enough to invest in business development and software development resources in order to stay competitive. For those who do not, you will see their market share evaporate as quickly as the market around them has. Like the originators and mortgage companies, those technology vendors who make the right investments and changes will grow quickly and pick up the low hanging fruit left behind by their competitors.
As a result, the next phase of contraction and attrition in the mortgage industry is likely to be a rapid consolidation from within the mortgage technology vendor space. Companies will either go out of business due to lack of sales and adoption, or be acquired as a result of economic and functional synergy. According to Scott Cooley of Cooley Consulting (Los Gatos, CA), “LOS vendors are going through their most traumatic period in history and clearly most are struggling. Some of them won’t survive and others are doing fair. To be sure, the entire landscaping has changed for the LOS vendor market just as much as it has for the mortgage origination market. Mortgage origination companies will need to be careful to watch their current vendor for signs of significant stress and also be mindful when selecting any new mortgage technology products.” With the volume of regulatory changes in place and yet to come, such a consolidation should be welcomed. With so many “niche” companies in the marketplace, a fragmentation affect occurs impacting how data is shared, reported and managed across the mortgage supply chain – from the originator to the Wall Street investor. This creates barriers between solutions and interested parties rather than tearing them down in order to create the visibility and transparency necessary to drive an efficient and compliant process.
MoRTgAge BAnkeRs & suPeR BRokeRs: The RoADMAP FoR success
The time is now. In order to stay on top and get ahead of your peers you need to capture your piece of the market. Following this roadmap will greatly improve your likelihood of success.
1) Solidify your base: Whether you raise capital, join a larger mortgage bank or partner with a community bank, the key is to solidify the future of your business and your employees. Volume is everything in today’s market
- continued from page 23
TheNicheReport.com 43
– your price point and ability to be competitive on FHA and conventional products depends on the volume you have and maintain. The lower your volume, the higher the perceived risk is in working with your company and the harder it is to get competitive rates and retain or recruit top talent. If you don’t build or reinforce a solid foundation, you may be making money now, but out of business in less than two years.
2) Invest in the right technology: You can no longer get by using a tool focused strictly on the originator. Every mortgage company, large and small, needs an enterprise loan origination platform. The term enterprise does not mean that you have to be a large mortgage company. It means that you must demonstrate and be able to prove your organization has automated and verifiable checks and balances appropriate for the size of the organization. Your technology must provide features to Management that are as good as the features they provide to your sales staff, if not better. Our prediction is mortgage regulations will continue to become more universally applied regardless of the business channel. That means you will be held to the same standard as all the other enterprise operations. This standard is both efficiency and regulatory. Without the right technology, you will struggle as you do more loans and add more loan officers. It is well understood how difficult it is to change. To quote a good friend, “In today’s market, no change is a change for the worse.” Without making the right changes you will become another of the unlucky statistics of the mortgage crisis.
3) Client Management: We have been fortunate to see the inner workings of many mortgage companies. At the core of every successful organization we’ve seen (the same ones that are growing in volume, size and number of originators right now) is an honest and systemic commitment of taking care of your borrowers. A ‘client focused’ culture needs to take root from within our industry and your company if you are committed to the longevity of mortgage lending. With loan files taking 30-50 days to close from the investor, tighter underwriting requirements, and reduced alternatives for low FICO scores, not to mention increased Downpayment requirements, it is more critical than ever to provide value to your clients in order to guarantee their loyalty.
Borrowers are taking longer to prepare for the mortgage process and you need to be the center of that preparation process. Loan officers need to nurture their sales pipelines and not simply “originate.” Origination is one step in the life of your client relationship, but it is not the end goal. The end goal must be providing all borrowers a mortgage they can afford to pay and making the origination process pleasant for the borrower. The more often you can duplicate this process the more successful you and your company will be.
Rick Roque is Principal of Menlo Company (www.menlocompany.com) , one of the largest Mortgage Technology and Operations consulting firms in the country whose focus is Mortgage Technology Vendors, Mortgage Brokers and Small to mid size Mortgage Banks. Rick is a former Senior Management team member at Calyx Software and a
national speaker at state and regional mortgage conferences on topics as mortgage market research and mortgage technology.
Joshua Weinberg is a nationally recognized speaker, author and leader in mortgage lending; specializing in integrating compliance and technology. He was recently recognized as one of the ‘Top 40 Under 40’ mortgage professionals. He is currently Director of Compliance for First Choice Bank a State Chartered and FDIC insured Bank
and stays active throughout the industry. He works closely with the Department of Housing and Urban Development, the Federal Reserve Board, and many State regulatory agencies and also sits on committees for the NMLS, Mortgage Bankers Association as well as the National Association of Mortgage Brokers. Previously he worked for Calyx Software where he was in charge of Compliance, Government Loan programs and Reverse Mortgages. He is a Certified Residential Mortgage Specialist and licensed as a Broker by the California Department of Real Estate. He has worked in retail banking environments and also worked independently as the owner of a mortgage broker company in San Francisco, CA. He has been originating loans since 2004 and continues to actively originate today.
44 May 2010
niche RePoRTs
PRiMe & 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 defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
Flagstar Wholesale Lending(866) 945-9872
Icon Residentialwww.iconwholesale.com
NetMore America, Inc.877-490-3140
Pacific Union Financial415-254-3279
Sierra Pacific Mortgage800-447-3386
offer a full array of fha and agency products, coupled with industry-leading underwriting turn times and technology
one of the nation’s leading lenders to the broker industry.
focus on Broker communication, Purchases, fha experts, crm's as additional support
our wholesale lending division caters to mortgagE BrokErS that wish to send loans for the purpose of providing excellent service to their borrowers.
retail Branches and wholesale lending nationwide. Privately owned specializing in residential conforming, fha, va and Jumbo. wholesale: www.spm1.com retail: www.spmloans.com
coMMeRciAL
Associates Finance Bank877-500-5530
GreenLake Real Estate Fund, LLC310-462-4637
Manaseh, Epharim & Associates 770-840-0112
MMG Capital LLC 310-295-1121
Porter Bridge Loan Company205-397-4068
up to 75% loan-to-value ratio• commercial Property acquisitions & refinancing• development & construction• hard money
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asset-based hard money loans; nationwide lender
Porter Bridge loan company is a nationwide direct hard money lender currently lending in every state except ak, hi and mi; we underwrite loans in 24-48 hours and issue a letter of intent within 72 hours. loan amounts from $250,000 to $5 million.
NEW
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TheNicheReport.com 45
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 defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
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 defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.
ACC Mortgage, Inc.240-314-0399 x 19
Associates Finance Bank305-500-5530
First Mount Vernon (866) 908-fmv1 (3681)
First Mount Vernon (866) 908-fmv1 (3681)
GreenLake Real Estate Fund, LLC310-462-4637
Manaseh, Epharim & Associates 770-840-0112
MMG Capital LLC 310-295-1121
Porter Bridge Loan Company205-397-4068
B & c lEnding iS Back. if your client has equity, we have a loan. loan amounts 100k to 2mm. we are the final decision makers, all decisions made at our location.
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Private direct commercial loans in ca and nv. all property types except raw land. our latest fund was raised specifically for loans in this tough economy. we're eager to lend, so please call today!
direct lender with fast closings. your source for international and domestic funding.
asset-based hard money loans; nationwide lender
Porter Bridge loan company is a nationwide direct hard money lender currently lending in every state except ak, hi and mi; we underwrite the loan in 24-48 hours and issue a letter of intent within 72 hours. loan amounts from $250,000 to $5 million.
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new construction and rehab loans for all types of commercial properties. your source for international and domestic funding.
46 May 2010
niche RePoRTs
TheNicheReport.com 47
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hundreds of mortgage professionals have saved their borrowers up to 35% or more on their title insurance by recommending Entitle direct.
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Prequal & marketing Software for loan officers. use our software for conventional, fha & va closing cost worksheets. make open house flyers with finance options and color pictures. Easy to learn and easy to use!
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emagic and myers provide affordable online mortgage loan origination solutions for banks, credit unions, mortgage bankers and originators to help automate and simplify their workflow, while greatly reducing costs associated with loan origination.
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a leading provider of comprehensive collateral valuation products targeted towards the mortgage lending, servicing, and insurance industries.
we understand that customer service and flexibility is crucial in building your business and we operate accordingly with every appraisal request
Freedom Mortgage Corp800-220-9498
Guaranteed Home Mortgage Co., Inc.888-572-3602
Mission Hills Mortgage Bankers925-849-1806
Residential Home Funding Inc.866-319-4442 x 130
Sierra Pacific Mortgage 800-447-3386
The Money Store877-885-4953
looking for individuals with mortgage experience who possess a high level of ethics and a desire to originate loans the right way
Specialized retail Platform for Experienced loan officers
Same name since 1969. Stable, family owned, well capitalized residential retail lender. division of gateway Business Bank. Select retail branch opportunities available on the west coast
currently seeking experienced Branch managers & seasoned loan officers in: ca, co, ct, dE, fl, ga, ky, md, mE, mi, nh, nJ, nm, ny, oh, Pa, Sc, tn, tx & vt
retail Branches and wholesale lending nationwide. Privately owned specializing in residential conforming, fha, va and Jumbo. wholesale: www.spm1.com retail: www.spmloans.com
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TheNicheReport.com 49
LenDeR & ResouRce DiRecToRy
ALL cReDiT consiDeReD MoRTgAgeB&C LENDING IS BACKwww.weapproveloans.com Contact: National Sales ManagerPhone: 240-314-0399 X 19Email: [email protected]
a la mode, inc.Websites and marketing tools for real estate professionals www.alamode.comPhone: 1-800-ALAMODEEmail: [email protected]
AMeRicAn TAx ReLieFSettle IRS taxes for a fraction of what you owe, call for a free consultation.Phone: 877-720-8933
APPLieD Business soFTWAReOrigination and Servicing software for hard money lenders.www.TheMortgageOffice.comPhone: 800-833-3343Email: [email protected]
APPRAiseRLoFTA leading provider of comprehensive collat-eral valuation products targeted towards the mortgage lending, servicing, and insurance industries.www.appraiserloft.comPhone: 877-229-7799 Email: [email protected]
AssociATes FinAnce BAnkPrivate investors and lenderswww.afinancebank.comContact: Mr. Enrique GonzalezPhone: 305-500-5530Email: [email protected]
ATTenTion LenDeRs!!Buyers of Distressed DebtEmail: [email protected]
BesT RATe ReFeRRALsSpecializes in direct marketing serviceswww.bestratereferrals.comPhone: 800-811-1402
BisMARk MoRTgAge coMPAnyResidential Construction Loanswww.bismarkmortgage.comJames Minarsich800-350-7199 [email protected]
cALyx soFTWAReAffordable software that streamlines and opti-mizes all phases of the loan process—from loan marketing through closing.www.calyxsoftware.comPhone: 877-862-2599email: [email protected]
cMg MoRTgAge incOne of the nation's leading wholesale mortgage banks with offices in San Ramon CA and Phoenix AZwww.cmgbanking.comContact: John Cathro / Mike LeePhone: 702-290-9210 / [email protected] / [email protected]
cReDiTcRMTHE ONLY full credit repair business in a boxwww.creditcrm.comPhone: 877-256-8162
DiRecT gRouP MARkeTingSmall-cell mailings to full-scale, multichannel campaigns reaching millions of consumerswww.dgmortgagemarketing.comPhone: 888-799-3959
DocMAgicThe largest dedicated loan document produc-tion company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challengeswww.docmagic.comPhone: 800-649-1362
eMAgicProviding automated online origination solu-tionswww.emagic.comContact: Chad NorthingtonPhone: 800-440-1625Email: [email protected]
enTiTLe DiRecT Savings up to 35% or more on title insurance in 30 stateswww.EntitleDirect.com/mortgagePhone: 877-936-8485 or [email protected]
LenDeR & ResouRce DiRecToRy
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FiRsT MounT veRnon i.L.A.Privately-owned, equity-based lender which specializes in lending to borrowers who require fast closingswww.FMV1.comPhone: 703-823-6800Fax: 703-997-2499
FLAgsTAR WhoLesALe LenDing One of the largest wholesale and correspondent mortgage lenders in the U.S.www.wholesale.flagstar.com [email protected]
FReeDoM MoRTgAge Branch Opportunitieswww.fmbranch.comPhone: 800.220.9498Email: [email protected]
geRAci LAW FiRMLeading expert in the creation of mortgage pools and fractional loan securities offeringswww.geracilawfirm.com(949) 379-2600
goToMeeTing.coMDemonstrate, present, collaborate – right from your PC or Mac®. Try it free for 30 dayspromo code: AK16
gReenLAke ReAL esTATe FunDPrivate Commercial Lender in CA & NVContact: Kamau ColemanPhone: 310-462-4637Email: [email protected]
guARAnTeeD hoMe MoRTgAge coMPAny, inc.Established and well-funded Mortgage Banker since 1992www.ghmc.com and www.joinguaranteed.comContact: Kelley Berkheiser or Louis TesorieroPhone: (888) 329-GHMCEmail: [email protected]
MBsAuThoRiTy.coMLive MBS data and analysis, lock recommen-dations, newsletters, and more! FREE trial! www.MBSauthority.comContact: Barry CorsePhone: 800-264-7135 x 2Email: [email protected]
MAnAseh, ePhARiM & AssociATesDomestic and international financier, offer up to 100% financing to qualified investors/borrowerswww.meandassociates.comContact: R.D. WalkerEmail: [email protected]: 770-840-0112
Mission hiLLs MoRTgAgeSame name since 1969. Stable, family owned, well capitalized residential retail lender. Division of Gateway Business Bank. Select retail branch opportunities available on the West Coastwww.mhmb.com Phone: 925-849-1806Contact: John ConnellyEmail: [email protected]
MMg cAPiTAL LLc
Asset-based Hard Money Lender; Nationwidewww.mmgcap.com
Contact: Chris Gleason
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nATionAL vALuATion seRvice, incComprised of thousands of fully vetted Indepen-dent Business Owners who as Appraisers, provide valuation and consulting services in 50 statesPhone: 786-581-9171Email: [email protected]
nATionWiDe APPRAisAL neTWoRkWe understand that customer service and flex-ibility is crucial in building your business and we operate accordingly with every appraisal requestwww.nationwide-appraisal.comPhone: 888.760.8899
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- continued from page 54loan modifications, including law firms and individual attorneys, will have to operate.
Now, let’s establish a couple of facts:1. On February 18, 2009, President Obama
introduced his Making Home Affordable foreclosure rescue plan, and said that getting a loan modification was free and easy… all you had to do was call the handy dandy, toll-free government phone number… or just call your bank directly.
2. People need help to negotiate a loan modification with a bank or mortgage servicer. Even President Obama thinks so and that’s why he’s spent tens of millions funding various nonprofit agencies to provide such help, however ineffectively they’ve been. To-date there have been hundreds, if not thousands of stories of servicers abusing homeowners who have tried going it on their own. I’ve personally been contacted by thousands who said they gave up and simply needed help.
3. The debate about HAMP, or Home Affordable Modification Program is over. It’s a prodigious failure… the contrast between its promise and what it has delivered is staggering. It out-performed Dubya’s Hope-4-Homeowners plan, which after six months had only modified one solitary mortgage. Well, woo-friggin’-hoo.
As a corollary, trial modifications are the biggest loan modification scam the country has ever seen. The bank tells you to make three payments of some amount that won’t reduce your indebtedness, but will be reported to the credit bureaus as delinquent payments, so that after you’ve made all three on time and as agreed, they can sell your home without notice.
So, what does this have to do with Mr. Jon Leibowitz, Chairman of the FTC? Well, Mr. Leibowitz is either oblivious to the facts, is a politician looking for his next appointed post… or is in the pocket of the banking lobby… I have no idea which, but it’s one of the three.
With the whole save-my-house-through-a-loan-modification thing going swimmingly, the FTC has decided the best way to protect homeowners from “scammers” who promise to help homeowners obtain a loan modification is to eliminate the private sector from the field… including attorneys, by making it impossible for them to be paid.
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Goldman Sachs forecasts 14 million foreclosures in the next three years. To put that kind of a number into perspective, if there were 14 million foreclosures, and each of those people needed say 10 hours of hope-and-change-type-counseling, that would be 140 million hours of said counseling, which, assuming a 24-hour work day, 365 days a year, translates into just a scosh over 383,561 years… for one person, of course, so that’s a silly comparison.
To be more realistic, let’s say you had say… 10,000 people… why then it would only take a smidgeon over 38 years… which should provide everyone with a lot more confidence that the president’s plan may still prove itself effective without help from the private sector.
Are you feeling me here? The FTC’s proposed new rule would make it so a private sector lawyer could help a homeowner obtain a loan modification, but only be paid after the homeowner has received a loan modification. That would mean that a lawyer would have to work for months and months without being paid, or without any assurance of ever being paid. And that’s simply something that isn’t going to happen… ever. No responsible lawyer is going to represent a client under such circumstances, nor should he or she ever do so.
At best a homeowner is being faced with uncertain outcome and complexity that they should not have to handle on their own. For example, on one end there’s the federal bankruptcy code. On the other there’s civil litigation against the bank. In the middle, there are various government loan modification programs, and often additional internal bank programs. There are also short sales, Deed in Lieus, Cash for Keys deals, property tax issues, and occurrences that can make one subject to a deficiency judgment.
If nothing else, a lawyer need not be paid for obtaining a loan modification, but for all of the work along the way. Why would a lawyer agree now to have a homeowner dump nine or so months worth of work on them, and then not be permitted to send a bill for what could easily be a year? Of course, there WON’T BE A SINGLE LAWYER in the country that will do it. Not one lawyer will offer to handle the work related to a loan modification under those terms. So, this rule if adopted, will effectively take away a person’s right to an attorney when he or she is losing their home.
Perfect… the housing markets are in free fall… foreclosures are ravaging our citizenry… the government’s
failed miserably to-date at trying to contain the damage… and the FTC is going to adopt a rule that makes it impossible for homeowners to hire a lawyer to help them avoid foreclosure. Perfect, Mr. Leibowitz… just perfect.
And let’s not forget, when one receives a trial or permanent modification under HAMP, or another program, they are asked to sign a legally binding contract. One that I saw was 26 pages long, if memory services… and without a doubt… written by lawyers. So, a homeowner should not consult an attorney prior to signing these documents either. Absurd.
Leibowitz continues to yammer on about how he’s going to protect American homeowners from unscrupulous scammers, but it’s too late to fall back on the vast populations living in the valley of the scammed. I’m not saying it’s been Mayberry RFD out there, but many of us were afraid to leave the house for fear we might meet a scammer. This is clearly not the case and besides, how many of those “scammers” turned out to be people trying to get the banks to modify loans only to find out that the President can’t even do that with any regularity or predictability? I’m not the only one watching this three-ring circus remember, this stuff has finally made the news on both sides of the ideological divide.
Leibowitz, what’s the deal? If you want to get rid of the loan modification scammers, you certainly don’t reduce the number of legitimate options available to help, you let people know where they can get help… beyond calling their bank or standing in line at HUD. Those options have long since proven to be less than adequate for hundreds of thousands.
We need an FTC rule, I would agree, but we need one that helps and protects America’s homeowners in meaningful ways and certainly not one that does anything less.
We’ve already seen how effective your “fire, ready, aim” strategies have been, Jon. This time, try something new… think.
Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on Ml-Implode.com called Mandelman Matters. He also publishes a Monthly Museletter and you can follow "Mandelman" on Twitter. Send your reponses to [email protected].
TheNicheReport.com 53
54 May 2010
I’m really starting to struggle with this “loan modification fraud” stuff. I’ve never been
quite comfortable with the whole thing… ever since Treasury Secre-tary Geithner and Attorney General Holder went on national television last April 6th, and at best misled
the American people… and me personally… on the subject of loan modification fraud.
I didn’t even need to go back and look up that date, April 6, 2009, and I’m sure it’s correct. I suppose I’ll remember it forever… a day that shall live in infamy, in my mind anyway.
Attorney General Eric Holder and Treasury Secretary Tim Geithner that Monday morning addressed the nation about the government's response to the fraudulent loan modification scams. They claimed scams were sweeping the nation. They made it sound like the problem was an epidemic; like there was a fraudulent loan modification company around every corner. They knew then that the key number they were quoting had nothing to do with loan modification scams. They also had no idea whether those being accused were in fact even scamming homeowners.
Here it is from the Associated Press, but I'm sure you can look on YouTube, if you'd like to see it come from the horse's ass... mouth… I meant mouth:
Government cracking down on mortgage scams, by
The Associated Press, April 6, 2009… The Federal Trade Commission has sent warning
letters to 71 companies it says were running suspicious advertisements and has filed five new civil cases to halt illegal loan modification scams. Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.
Did you catch the lie? Chances are you did not. I didn't either, at the time. Here's the lie:
“Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.”
Was the FBI investigating about 2,100 mortgage fraud cases? You bet they were. It said so right on the FBI Website. However, those 2,100 mortgage fraud cases were filed between 2003 and 2009. The FBI's Website also provides a definition of "mortgage fraud" that has just about nothing to do with the loan modification scams Holder and Geithner were talking about on April 6, 2009, when they gave out the number as if it was relevant.
They needed a big number, something larger than 71 or 5, and they found one. So they used it. And that’s, at best, deceptive crap. My mother, I’m almost positive, would call it lying.
Today, congress has given the FTC the responsibility to develop a new federal rule under which organizations offering to help homeowners obtain
Jon LeiBoWiTz
By MARTin AnDeLMAn
FTC Chairman
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