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ecognised Teaching Union representatives and Fiona Brook was substituting for WendyTerry for this meeting only.2 DECLARATIONS OF INTERESTThere were no declarations of interest.3 MINUTES OF THE MEETING HELD ON 29 JUNE 2010The Minutes of the Meeting held on 29 June 2010 were agreed as a correct recordsubject to the following amendments:• Apologies had been received from David Begley• Item 5, Report on Schools with Excessive Surplus Balances and Deficits at theend of the Financial Year 2009/10 Page 4 – delete Peter Rowe as arepresentative on the Appeals Panel.4 FINANCIAL MANAGEMENT IN SCHOOLSJanice Davison reported that at the meeting on 29 June 2010, the Schools ForumFunding Group (the Funding Group) was asked to consider a number of proposalsregarding revisions to the Policy for Supporting Good Financial Management inBuckinghamshire Schools following recent guidance on the use of surplus balancesissued by the Department for Education (DfE).The Funding Group supported the proposals, with the exception of the proposal toreduce the thresholds for nursery, primary and specials schools from 8% to 5% of schoolbudget share, with a £10,000 de minimus level and to reduce the threshold forsecondary schools from 5% to 3% of school budget share. The revised policy willtherefore not include any change to the current threshold levels for schools withpotentially excessive surplus balances.It is anticipated that the revised policy will be submitted to the December meeting of theSchools Forum for approval. A Member asked if the new academies were excluded andthis was confirmed.BudgetMembers were advised that at the time of the report out of 228 schools inBuckinghamshire 196 had submitted a 3 year financial plan and that 32 had yet tosubmit their 3 year plans.All schools had submitted financial plans for 2010/11 and currently 30 schools wereindicating a deficit budget, two of which will resubmit revised financial plans showing abalanced or surplus budget after receiving support from Schools Financial Managementor the Schools Specific Contingency Fund.Four schools had submitted deficit budgets of less than £1,000 and it is anticipated thatthe issues will be resolved and that it will be possible to set a balanced budget.Fourteen schools had an approved Licensed Deficit with a recovery plan in place. Fourschools were awaiting decisions regarding Schools Specific Contingency applications.Another six schools were working on producing a recovery plan which achieves abalanced or surplus position within an agreed timescale in order that a Licensed Deficit

TOMORROW’S MORTGAGEEXECUTIVESeptember 2013Phil HallOn The Cover49Color CommentaryVeteran financial services journalist Phil Hall has joined the PROGRESS in Lending team and he isn’tholding back in sharing his views.Inside Track17Process ImprovementTony Garritano notes that with the regulatory burdenincreasing, more and more lenders are running scared.21Future TrendsRoger Gudobba believes that divergent thinking maybe just the thing needed to thrive in today’s mortgage market.25Business StrategiesMichael Hammond says there are solid strategiesthat will enable you to get more business out of LinkedIn..Market Vision05Editor’s NoteThis section discusses how the fallingdelinquency rate equals industry recovery.07Recovery TipsGeorge Yacik details that mosthomeowners are still underwater on theirmortgage.11Your VoiceCapsilon talks about how it’s importantto support your local trade association.

TOMORROW’S MORTGAGEEXECUTIVETony GarritanoEditorRoger GudobbaExecutive EditorMichael HammondSenior EditorJanice CordnerCreative DirectorMiguel RomeroPhoto Art DirectorContributors:(in alphabetical order)Ray BrousseauEric KujalaBarbara PerinoLeonard RyanScott K. StuckyRebecca WalzakGeorge YacikThis magazine is distributed by:CONTENTSSeptember 2013Features29Successful LeadershipPerino and Walzak stress that the industryneeds leaders to navigate the influx of change.35Compliance ConcernsQuestSoft shares the latest data on whatregulatory rules concern lenders the most these days.43Document EverythingDocuTech warns that the new regs hittingour industry will place a stronger emphasis ondocumentation.55Rising RatesCarrington Mortgage Services says thatrising interest rates are not necessarily a bad thing.EXECUTIVE TEAMTony GarritanoFounder and ChairmanRoger GudobbaChief Executive OfficerMichael HammondChief Strategy OfficerKelly PurcellChief information OfficerGabe MintonChief Technology OfficerSteven HorneChief Operating OfficerMolly DowdyChief Marketing OfficerIn The Trenches15Our Lender BoardMarket PulseA survey conducted by origination vendorEllie Mae compares this summer to the summer oflast year.Tomorrow’s Mortgage Executive magazine is a monthly publication distributed online at www.progressinlending.com. The mission of the publication is to provide one placewhere people who believe technology strategies can solve pressing mortgage problems can express their ideas. The magazine was designed to be a vehicle to createconversations that will move the mortgage industry forward. As such, the information found in this publication is all about thought leadership and should not be interpretedas recommendations coming from the publisher. We are here to give our contributors a voice. All materials found in this magazine are not guaranteed for accuracy and thepublisher is not liable for any damages, losses or other detriment that may result from the use of these ideas. © 2012 Tomorrow’s Mortgage Executive. All rights reserved.

EDITOR’S NOTESAre We Out Of The Woods?Remember the record number of foreclosures that we as an industry havedealt with not too long ago? Well, how are we doing these days youmight ask? Pretty well actually. According to the latest Equifax’ NationalConsumer Credit Trends Report, the total balance of severely delinquentfirst mortgages (90 days past due or in foreclosure) in June 2013 is $325 billion,a five-year low and a decrease of more than 27% from same time a yearago ($450 billion).The total balance of first-mortgage loans that completed the foreclosure processand transitioned to bank-owned property or other severe derogatory statusdecreased more than 19%, from $16.7 billion in June 2012 to $13.5 billion inJune 2013. This is the lowest level for June since 2007.“Rising home values are reducing the incentives for homeowners to defaulton their mortgage loans, resulting in more and more homeowners transitioninginto positive or near-positive equity territory,” said Equifax Chief EconomistAmy Crews Cutts. “The implications of this trend are that more homeownerswill be able to sell their homes without the hassles of negotiating a short saleor move to take a new job without worrying how they can afford to pay for twohomes. The healing in the housing market is really gaining momentum and willfuel a stronger pace of economic recovery.”The report also concluded that:>> Of total severely delinquent first mortgage balances, loans opened 2010and later represent only 7% ($21.7 billion).>> The total balance of first mortgages in foreclosure in June 2013 is $105billion, a five-year low and a decrease of 38% from same time a year ago.>> In June 2013, the total balance of severely delinquent home equity revolvingloans (including foreclosures) is $8.8 billion, a five-year low and ayear-over-year decrease of more than 31%.>> In that same time, the total balance of severely delinquent home equityinstallment loans (including foreclosures) is $4.3 billion, a five-year low and ayear-over-year decrease of more than 28%.Good news all around. ❖5Tomorrow’s Mortgage Executive

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Recovery TipsLet’s Keep PerspectiveLeft unsaid in many of the reports I read was thathomeowner equity while on the rise, is still more than $4trillion below the pre-bubble peak.By George YacikThe Federal Reserve released the mostrecent version of its great quarterly datareport, Financial Accounts of the UnitedStates, formerly (and better known) as the Flowof Funds report. News articles about the releaseled with the good news that U.S. household networth rose to a record $70.3 trillion at the endof the first quarter, above the previous peak of$68.1 trillion in the third quarter of 2007.On the surface, which is what the media reported,the report implies that Americans havenow recovered every dollar that they lost duringthe Great Recession.Of course, what many news stories left out isthat most of that recovery is due to the increasein the value of financial assets, mainly stocks,which we know have made a full recovery sincecratering in 2009. Certainly nothing wrong withthat.Despite all the positivehousing statistics we’veseen over the past fewmonths, manyhomeowners are stilldeeply underwater.Left unsaid in many of the reports I read wasthat homeowner equity – the value of homesminus residential mortgage debt – while on therise, is still more than $4 trillion below the prebubblepeak of more than $13 trillion in 2005.The amount of home equity owned by U.S.homeowners totaled $9.1 trillion at the end ofthe first quarter. While that’s up sharply fromthe recent low of $6.3 trillion in the first quarterof 2009, it’s still more than 30% below the 2005peak, when a lot of today’s homeowners boughttheir homes.We also need to keep in mind that more thana third of homeowner equity, or $3.3 trillion, isowned by people 62 years and older, accordingto the National Reverse Mortgage LendersAssociation. Those people are not known forgoing out and getting mortgages, except forthe tiny fraction that are interested in getting areverse mortgage.If we subtract that $3.3 trillion out of the $9.1trillion total, that leaves less than $6 trillionowned by everyone else.Further, according to the Fed, homeownerequity as percentage of household real estate –the amount of the house the homeowner ownscompared to what the lender owns – was lessthan 50% in the first quarter. While that figure isup nearly ten percentage points since 2009, it’swell below the nearly 60% figure as recentlyas 2005.What these still-depressing figures all meanis that, despite all the positive housing statisticswe’ve seen over the past few months, manyhomeowners are still deeply underwater andstill have a long wait ahead of them beforethey can hope to sell their homes and at leastbreak-even or refinance if they can’t qualify fora HARP loan. This will keep the nascent housingrecovery operating at just slightly abovestall speed, especially now that interest rates arestarting to rise, making it even more difficultfor people to qualify for mortgages.“More than 10 million owners owe more ontheir mortgages than their homes are worth,”notes the recently released Harvard ResearchCenter report, The State of the Nation’s Housing2013, subtitled “A Housing Recovery, ButNot for All Americans.”“Since 2009, HARP has helped some 2.27Tomorrow’s Mortgage Executive

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Recovery TipsMore generally, both market and regulatory uncertaintiessurrounding the mortgage lending business have keptcredit standards tight.million low-equity andunderwater borrowers withFannie Mae- and FreddieMac-backed mortgages takeadvantage of today’s lowinterest rates, but millionsmore borrowers with nongovernment backed loanshave had no such opportunity,”the report says. “Moregenerally, both market andregulatory uncertaintiessurrounding the mortgagelending business have keptcredit standards tight andprevented a more robusthousing market recovery.”In an otherwise positivereport on rising homeownerequity, CoreLogic recentlysaid that more than 21% ofresidential properties witha mortgage were still in anegative equity position atthe end of the fourth quarterof 2012. Moreover, ofthe 38.1 million residentialproperties that actually havepositive equity, 11.3 million,or nearly 30% of them, haveless than 20% equity. Thosepeople “may have a moredifficult time obtaining newfinancing for their homesdue to underwriting constraints,”CoreLogic noteswith some understatement.I don’t bring this stuff upbecause I’m one of thosepeople who always view the glass as less than halffull. But we need to keep in mind that we – lendersand borrowers alike, with lots of help from thegovernment – dug ourselves a gigantic hole duringthe bubble years, and we still have a long way to gobefore we can say we’re finally out of it. George Yacik has been a financial writer for more than 30 years. After working 12 years at The Bond Buyerand American Banker as a reporter and editor, he joined SMR Research Corp. as a vice president, wherehe was the lead research analyst and project leader for SMR’s studies on residential mortgages and homeequity lending. Since 2008 he has been writing for a variety of mortgage-related and financial publications.9Tomorrow’s Mortgage Executive

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Your VoiceMake A DifferenceIf you are an active member in your local Mortgage LendingAssociation, good for you. If not, maybe it’s time to get involved.By Eric KujalaThe lending industry has changed morein the last five years than it has in thelast seventy years. Soon the full weightof the Dodd-Frank Act will be barring down onall of us. Thankfully we have a great nonprofitindustry group out there providing guidance oncompliance and best practices for the lendingcommunity. Since 1921 The Michigan MortgageLenders Association has been the fabricof our state’s most reputable industry leaders.So it should be no surprise that at this time inour history we have more members than at anytime in our history.The value these organizations bring to thelocal community is valuable even though youmay have never heard of them. I personally havebeen involved with the Michigan MortgageLenders Association (MMLA) for about threeyears now and have been blown away by theThese organizations arefighting for you as aLoan Officer, a processor,a CEO, an OperationsManager, and a businessowner.incredible resource this organization is. Despiteall of the wild swings in the lending industry,the value received and provided by ourorganization has been tremendous.From a legislative perspective The MMLAkeeps us informed of what is going on at thestate and federal level. The MMLA legislativecommittee recently organized a successfullegislative day at our state capital, targetedaround some important changes for our industryand was able have some positive influence onseveral important issues. Our MMLA PresidentAllison Meyers, Brent Green, Murray Brownalso testified in front of the House FinancialServices Committee. Many of the associationmembers were able to talk directly withsome influential Government officials andrepresentatives to clearly articulate the Lendingcommunity’s position.The educational opportunities that are offeredby the MMLA are invaluable. Especially whentrying to comply with Loan Officer licensing,continuing education, and overall requirementsneeded to be a successful, compliant andinformed lender. There are also many sales,marketing and industry experts brought infrom all over the country that provide valuableinformation.Local communities benefit as well, as localassociations often times will hold social eventsand conferences that help the local economy.Granted it’s not like bringing in the Superbowl,but there are a lot of local businesses thatgets direct benefits by hosting or providingservices for these events. The MMLA’s annualconference is a three-day event, typically heldat a convention center in Northern Michiganthat brings in over three hundred people toa city, occupying hotel rooms, catering fromlocal eateries, hiring entertainment, and evenpartaking in some nightlife. All of which feedlocal economies with participation.Above and beyond the items above, inmy opinion, the most important part is thatactive members share a common goal, in thatwe all want advancement of the industry in a11Tomorrow’s Mortgage Executive

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Your Voiceresponsible and ethical manner. The connections,friendships, and exposure become invaluable. Beinga relatively new member, I often find myself talkingto many “seasoned veterans” of the industry. Thea CEO, an Operations Manager, and a businessowner. They are fighting via legislative influence,joining forces with the National MBA to fighton the Federal level, fighting to create venues toIn my opinion, the most important part is that activemembers share a common goal, in thatwe all want advancement of the industry ina responsible and ethical manner.knowledge and experience I receive from them isinvaluable. Coincidentally as well, I have heardmany of those seasoned vets say the same thingabout talking with us. There is a new perception, anew kindled fire with all of these changes that allowsus to all learn from each other.If you are an active member in your localMortgage Lending Association, good for you. If not,maybe it’s time to get involved. These organizationsare fighting for you as a Loan Officer, a processor,pass along important educational resources, andmost importantly providing an environment tocollaborate with colleagues in these turbulent times.Get involved, stay involved, and reap the rewards.The MMLA’s membership is up 22% from lastyear, and this year’s annual conference is targetedto be one of the largest in several years. Thesethings would not be achievable if we did not have astrong level of activity and support from the Boardmembers themselves. Be part of the solution. ❖Eric Kujala is Enterprise Sales Manager at Capsilon. Since 2004, Capsilon has helped lenders and othermortgage companies replace paper with electronic loan folders and paper-based processes with secureonline collaboration. The company’s product, DocVelocity, is a cloud-based imaging solution enablingdocument capture, collaboration, loan delivery and retention.13Tomorrow’s Mortgage Executive

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MARKET PULSEHow Are Rising Rates Impacting The Market?There’s been a lot of talk that rising interest rates are going to slow refinance activity, but is that really what’s happening?Some say that we’re in for a prolonged purchase market starting next year. Is that an accurate assumption? New datafrom Ellie Mae sheds some light on these predictions.According to the latest Ellie Mae Origination Insight Report, “in June, the mix of refinance-to-purchase loans continued torebalance as higher rates made refinancing less attractive and the prospect of higher home prices and potentially higher interestrates may have brought more buyers to the closing table,” said Jonathan Corr, president and chief operating officer of Ellie Mae.“Closed purchase loans accounted for 49% of the volume in June 2013, the highest level since we began tracking in August 2011.The Ellie Mae Origination Insight Report provides monthly data and insights from a sampling of closed loan applicationsthat flow through Ellie Mae’s Encompass360 mortgage management software and Ellie Mae Network. The characteristicsof closed and denied loans presented in thisreport are averages.In 2012, the total volume of mortgagesthat ran through Ellie Mae’s Encompass360mortgage management software was approximatelythree million loan applications,or 20% of all U.S. mortgage originations.The Origination Insight Report minesits application data from a sampling of approximately44% of all mortgage applicationsthat were initiated on the Encompassorigination platform. Given the size of thissample and Ellie Mae’s market share, thecompany believes the Origination InsightReport is a strong proxy of the underwritingstandards that are being employed by lendersacross the country.What other findings could be seen in thelatest report? “The average interest rate on a30-year loan rose to 3.918% in June 2013,the highest point since June 2012 when itwas 3.992%,” Corr noted. “The transitionfrom a refinance to a purchase market mayalso be why we saw a growth in adjustablerate mortgages in June 2013, hitting 4% forthe first time since May 2012. This may bea sign that some buyers are trying to stretchtheir budget as both home prices and interestrates tick up.”Finally, Corr noted, “HARP-related refinancingactivity continued to cool with conventionalrefinances at 95%-plus LTV droppingfrom 9.40% in May 2013 to 8.00% inJune 2013.” ❖Mortgages:A Tale of Two SummersLTVSTAYEDSTEADY YEAROVER YEAR AT80%ON AVERAGE30-YEARRATESRate averagesdecreased by .074S 2012 20133.992 3.918MORE DIVERSE FICO DISTRIBUTION660-699(18.34%)621-659(8.15%)June 2012 June 2013700-749(29.00%)750+(42.48%)UNDER 620(2.04%)660-699(29.80%)621-659(15.41%)700-749(25.67%)750+(26.61%)UNDER 620(2.50%)47.72 percent ofmortgages fromJune 2013 hadan average FICOscore under 700,compared to only28.53 percentfrom June 2012.June 2012vs.June 2013REFI vs. PURCHASE LOANS2012 2013REFI 54%PUR 46%REFI 51%PUR 49%Refis are slowing whilenew purchases are increasingCredit EasingIn June 2012, 71.47 percentof mortgages had an averageFICO score of more than 700,compared to only 52.28 percentin June 2013.FICO UNDER 700 FICO OVER 700©2013 Ellie Mae, Inc. Ellie Mae®, Encompass®, Encompass360® (and the Ellie Mae logo) are registered trademarks of Ellie Mae, Inc.80%70%60%50%40%30%20%10%0%JUNE 2012 JUNE 201315Tomorrow’s Mortgage Executive

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Process ImprovementThere Is HelpWith the regulatory burden increasing, more and more lendersare running scared. I’m here to say it doesn’t have to be that way.17By Tony GarritanoTomorrow’s Mortgage ExecutiveIknow that times are tough. Things are gettingharder. But are you going to quit? This maysound like an intervention, and I guess in alot of ways it is. Complying with new regulationdoesn’t have to be hard if you have the right technologypartners.If you think about it, the loan origination system(LOS), as the system of record, should be justas stressed as lenders are, but instead these LOSvendors are working tirelessly to ensure that theirlender clients are in compliance. Teresa Blake,Practice Director, Lending Solutions, at WiproGallagher Solutions, which provides end-to-endlending solutions to financial institutions, is fullyaware of the pressure that lenders are feeling thesedays.“The biggest challenge that I see our lender clientsfacing is that they are trying to manage all ofthe compliance and regulatory change, while alsowanting to do all of the innovative, strategic workthat might really change or propel their business,”Blake points out. “When I look at the amountof hours involved in any one of these regulatoryprojects, and then you stack up on top of that allthe stuff that lenders want to be doing, I think it’sjust a continued challenge for lenders to prioritizewhat comes first.”“In my view, the biggest challenge that lendersface is automation,” noted Steve Wiser, CEO andfounder of Specialized Business Software (SBS),a provider of custom software solutions for insurance,mortgage and financial services companies.“Here’s what I mean: You really have to automatethese rules, otherwise it’s going to be impossibleto maintain compliance if everything is donemanually. You need to make sure that the rules arein place, that the borrowers are being treated consistentlyacross the board, and that you have audittrails that are keeping track of the fact that all therules are being followed. Beyond that, if you don’thave that infrastructure in place, you’re going tohave a lot more pain. If you have the infrastructurein place, the next thing is to make sure you canmodify it easy enough that you can comply withthe different rules as they come.”To this end, SBS has implemented a four-stepdiscovery process to enable Property and Casualtyagencies and carriers to use customized softwareto boost profitability and eliminate errors andredundancy. SBS’ discovery process focuses onproducing a strategic plan that reduces the time ittakes to develop the software, implement the systemand train employees in its use, while keepinginsurers and agencies involved and in control ofthe development process.Any time technology can come into play toreduce errors, it’s going to save lenders moneyand keep them compliant. At the same time, AliceSorenson, Chief Investment Officer of LRES, aThe biggest challengethat I see our lender clientsfacing is that they aretrying to manage all of thecompliance and regulatorychange.national provider of commercial and residentialvaluations and asset management for the mortgage,banking, credit union and real estate industries,notes that “the biggest challenge comingfrom the new regulatory burden is that not only dolenders have to understand and be prepared, andhave the systems and audit trails, but they haveto be able to generate a profit, as well. How doyou do all of this and still generate a profit? It’svery cost intensive and it’s expensive. It’s going totake some very unique thinking to be able to adaptto all these regulations and still maintain marginsthat make sense to keep lenders in the business.”But there is hope. Sorenson advises that, “thereare a lot of things a lender can do to contend withwhat we’re up against in regards to compliance.The first and most important thing, I think, is to

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Process Improvementrecognize how important it is to maintain compliance,and at the same time, to understand that thesenew rules are here to stay.“The best solution I see for this situation is forlenders to put together a compliance team headedby a legitimate compliance officer. That involves alot of infrastructure, it involves a lot of cost and a lotof companies aren’t able to handle that. If they can’ttake on that cost, than the next best solution wouldbe to outsource that function. Regardless of whatpath the lender chooses, they want to make sure thatthey get the specialist, the experts, the people mostknowledgeable in the area of regulatory compliancebecause this is here to stay. It’s not going away andit’s creating a huge arena of risk that needs to bemanaged,” concludes Sorenson.And compliance can take a variety of forms. JoeLudlow, VP of Advantage Systems, a provider ofaccounting and financial management tools for themortgage industry, says, “From our perspective, abig part of compliance is compensation. What I’mreally talking about is commissions for loan officers.As we have already seen, the CFPB is coming downpretty hard on firms that are not compensating loanofficers according to Dodd-Frank. It’s very importantthat you be able to survive a compliance audit withregard to compensation.It’s very hard todo that if your systemfor compensating loanofficers is inadequate— spreadsheets justaren’t going to cut it.“You need a system,or a procedure,that allows an auditorto review compensationover time, perhapseven looking ata whole year’s worthof compensation for aloan officer, and at thesame time, make surethat what your system produces matches up to whatyou actually paid them,” Ludlow continued. “Asyou know, Dodd-Frank really changed the way wepay loan officers and that’s a big part of how loansend up getting priced.”Advantage Systems’ Commission CalculationModule assists lenders with simplifying adherenceto pending loan officer compensation rules. TheCommission Calculation Module of the Accountingfor Mortgage Bankers (AMB) accounting systemenables lenders to automate the calculation of commissionsand bonuses in both retail and wholesaleenvironments. This is especially important as lendersadjust to interpretations of the Federal ReserveBoard’s loan officer compensation guidelines.Through the tool, lenders have the flexibility to definehow these amounts are calculated based on theirown business rules.The best solution I see forthis situation is for lenders toput together a complianceteam headed by a legitimatecompliance officer.The point is that vendors are just as aware of thenew rules as lenders are and they are getting readythemselves. “We actually started working on buildingrequirements for all of the regulatory change beforethe rules are even final,” said Blake. “We reallytry to dissect the rules, and interpret the intent whilewe wait for the final ruling.We are always in the processof writing requirements andstarting development workso that as the rules are finalized,we leverage our changecontrol processes to bringany new or refined elementslive. Also, we socialize withour lender partners beforethe rules are even final orgiven a time line.”Wiser agrees that vendorshave to be proactive in orderto ensure the success of theirlender clients. “Our lenderclients are coming to us withthe upcoming rules that they want to adhere to anda lot of them actually have different methods of approachingthem, but our goal is to make sure that thesoftware is ready to go,” he added.The bottom line, according to Wiser is, “The onething that we know for sure is that new rules comeout every year, rules are changed every year, andyou need to make sure that your system is workingwith you to handle these changes.” ❖19Tony Garritano is Chairman and Founder of PROGRESS in Lending. As a speaker Tony has worked hardto inform executives about how technology should be a tool used to further business objectives. For over10 years he has worked as a journalist, researcher and speaker. He can be reached via e-mail at tony@progressinlending.com.Tomorrow’s Mortgage Executive

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Future TrendsDivergent versusConvergent ThinkingHow do you think? The answer to this question may very welldetermine your future success in the mortgage business.By Roger GudobbaThinking skills are the intellectual skillssuch as the skills of memorizing andrecalling facts and information, clarifying,making analysis, generating ideas, makingdecisions, problem solving, and planning. Lastmonth’s article on “Brainstorming and CreativeThinking” addressed the methodology developedby IDEO and the process for creativethinking, sometimes referred to as divergentthinking. The opposite of divergent thinkingwould be convergent thinking. Are you confusedyet? I understand that this all may sounda bit complicated, but in actuality it is fairlysimple. You also may be wondering how thisrelates to the mortgage industry. I promise, I’mgetting there. Let’s define these terms a littlebetter first.Divergent thinking is considered “thinkingoutside the box” where the imagination runswild and the possibilities are endless. It startswith a task or problem and considers all theways you can accomplish that task withoutthinking in specifics. Instead of a single correctanswer, there may be a whole host of new perspectivesand possibilities. An idea is followedin several directions to lead to one or more newideas, which in turn leads to still more ideas. Itinvolves having a different idea that works aswell or better than previous ideas. Brainstormingis a structured form of divergent thinking.To provide an example that hits close tohome, let’s think about rising interest rates andhow that impacts lenders. When rates rise, purchasebusiness, as opposed to refinance business,also rises. So, today lenders are focusedon creating a more meaningful relationshipwith new borrowers to get their share of thatnew purchase business. A divergent thinkermight create a marketing strategy that includesa Twitter account as a way to reach more borrowerswhere they live in a social setting. Usingsocial media to chat with borrowers abouttopics like the weather or politics won’t resultin an immediate mortgage, but it will familiarizethe lender with a swath of borrowers thatthey might not meet otherwise. Who wouldhave thought that you can bring in businessby talking to random people on Twitter abouteveryday topics? In actuality, you can do justThinking outside the box:Divergent thinking allowsus to use our imaginationto explore all sorts of newpossibilities.that if you’re a divergent thinker.Convergent thinking is considered “thinkinginside the box” where we focus on a commontask or solution. You gather facts and information,analyze, filter, judge, select and eliminateideas to find the best ones to use in relation tothe task at hand. This is an attempt to bringthoughts from different directions into a unionor common conclusion.To go back to my prior example in which wepondered how the divergent thinker might getmore purchase business through the creativeuse of Twitter, the convergent thinker mighttake a different path. The convergent thinkerwill analyze the company’s point-of-sale,evaluate prominent point-of-sale technologyvendors and select a new frontend system thatgives that lender a more user-friendly websiteto make it more desirable for new borrowers totransact with the lender online.Both forms of thinking can be positive. Thatpositive impact can be made even greater whenthinkers collaborate. Collaborative thinkingflows in one of two distinct directions: 1) it candiverge outward, in a broad, multidirectional,expansive exploration of ideas; or 2) it can con-21Tomorrow’s Mortgage Executive

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Future Trendsverge inward, narrowing focus in an effort to judge,select and eliminate ideas. The two styles of thinkingare very powerful when used sequentially. However,if they take place simultaneously they will quicklybecome an obstacle to success.At first glance, divergent thinking might seem tobe more creative than convergent thinking,but both are essential. Each of thetwo thinking processes has an importantrole to play. Maybe the best way in whichconvergent thinking may be combinedwith divergent thinking is to engage indivergent thinking in order to generatemany novel ideas, and then to evaluatethese ideas by using convergent thinking.An understanding of both of these typesof collaborative thinking will have a profoundimpact on your ultimate success.Now, let’s explore this in the world ofthe software community. In actuality, most peopledon’t consider the thought process when developingsoftware applications.Convergent thinking is our normal state. Whendevelopers design software solutions they use convergentthinking almost exclusively. They tend to beanalytical and judgmental in their thinking process.They have a tendency to focus on the choices thatthey wish to implement and ignore or reject evidencethat conflicts with those choices.Thinking inside the box:Convergent thinking allowsus to use our knowledge toexamine concepts and seewhere they fit.On the other hand, divergent thinking would allowthe development group to generate as many ideas aspossible in a very short timeframe. In this environment,all parties are encouraged to search for a highquantity of ideas, and are not just looking for qualityideas. Anything and everything is possible. Therereally is no such thing as a bad idea. During thisprocess, all judgment is suspended and no criticismis allowed. Yet many consider this a waste of timeand effort. In an article, John Paul Mueller stated,“In short, divergent thinking is a necessary part ofsoftware design, which many companies avoid todayto their detriment. The best way to look at this processis that you diverge from the task to explore allpossible ways to accomplish it and then, after carefulconsideration, converge in a set of solutions thatyield the finished application.”The typical software development has 5 phases.(1) The initiative starts with the definition of requirementsfor the project. It may be a new product or anupgrade to an existing solution. (2) The design phasesets the specific tasks for the project. (3) The developmentphase is where the actual coding is completed.In some cases, the developer may have littleinput or control over the specifications and design asthe project may already be defined. (4) The testingphase or debugging phase may uncover some deficienciesand necessitate some modifications to therequirements. Going back to Phase 1 could involvesignificant changes and rework resulting in misseddeadlines and a solution does not meet the intendedgoal or outcome. (5) The implementation phase is thefinal phase.Recently the concept of sprints has evolved whereyou break the design down into smaller parts andindependently perform Phases 2 through 4 on eachsprint. This is more manageable and a requirementchange in an individual sprint may not impact theother sprints.In the example of software development, divergentthinking will have the greatest impact in Phase1. Before defining requirements you identify theneed. With a cross section of roles, responsibilitiesand expertise, the brainstorming session will uncovera number of possibilities. As the group converges ona solution you will be able to visualize the completepicture and hopefully significantly reduce the potentialof rework and delays. Too often we think ofthings as black or white. I don’t have to tell you thatis not the case. In my view, mortgage lenders andtechnology vendors can benefit from using a bit ofdivergent thinking. Roger Gudobba has over 25 years of mortgage experience. He is CEO at PROGRESS in Lending and ChiefStrategy Officer at technology vendor Compliance Systems. Roger is an advocate of data standardizationand a more data-driven approach to mortgage. Roger can be reached via e-mail at rgudobba@compliancesystems.com.23Tomorrow’s Mortgage Executive

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Business StrategiesGet More Out Of LinkedInAre you confused why that chef from Indonesia, instead of a top 20lender, has just checked you out on LinkedIn? Here’s the reason:By Michael HammondAre you on LinkedIn? Do you get leadsfrom LinkedIn? In my view LinkedIn is agreat professional network. So, if you’renot on it, you should be. And for those of you thatare on it, you should be getting leads from it. It’sall about optimizing your presence. LinkedIn canpay back dividends. So, don’t get disillusionedabout LinkedIn, get business from LinkedIn.In an article that I read recently called “WhyRelevant Keywords Are Essential To Your LinkedInSuccess” by Andy Headworth, he tells peoplenot to “get frustrated at the lack of people viewingyour LinkedIn profile and your LinkedIn CompanyPage.” He goes further to ask: Are you confusedwhy that chef from Indonesia has just checkedyou out on LinkedIn? There is a good reasonwhy these things are happening - your LinkedInprofile does not contain the right content. It doesnot contain the relevant keywords that you wantyour audience to find you for, when searching onLinkedIn. Without these important keywords, youLinkedIn is a complex(and sometimes scary)social network becauseof the sheer volume ofinformation, data andfunctionality on theplatform.will rarely appear in relevant searches, and yourforay into social recruiting won’t be quite as successfulas it could have been.LinkedIn is a complex (and sometimes scary)social network because of the sheer volume of information,data and functionality on the platform.However complex it is, LinkedIn can be brokendown into three simpler functions of it’s platform:1. Attraction2. Search3. Grow network (for search and attraction)And what is the common denominator for all ofthese? KEYWORDS.So, here’s how you get started. Ask yourself:Do you know the keywords that you want peopleto find you for on LinkedIn? Do you know whatthe best keywords are and what people are actuallysearching for? Let’s break it down. Here aresome clear tips from Headworth:• Ask yourself what words do people usewhen they try and find people like you onLinkedIn? (This plays into the attractionfunction)• Ask yourself what do you use when you tryand find people on LinkedIn? (This playsinto the search function)• Ask yourself how many of these keywordsyou think they use when they search onLinkedIn? (2 or 3 max should be your goal)• Ask yourself if you are aware that thesearch engine on LinkedIn is (among otherthings), keyword driven?• lso, were you aware that people use thesame searches on Google as they do onLinkedIn?• Lastly, remember that keywords can alsobe job titles.This is LinkedIn 101 - the basics you must knowif you are going to make sure that your profile isbeing seen by all the right people. (You do knowwho you want to read your profile, don’t you?)Now, let’s move beyond theory. Headworthgives a powerful example of how powerful theright LinkedIn keywords can be. Here is a minicase study that he shares:The company is a sector leading recruitmentcompany. The existing LinkedIn profiles werevery patchy, incomplete and “fluffy” with lovely25Tomorrow’s Mortgage Executive

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Business Strategiesdescriptions of their company (in the LinkedIn Summaryand Experience sections), full of adjectives anddescriptive phrases that mean nothing to a searchengine. Phrases like, “market leading”, “great placeto work”, “dynamic’ company”, “motivated consultants”etc, etc. As previously stated - ‘fluffy’! So, thefirst thing to do was to establish who the companywas trying to attract with their profiles? Candidates,or clients, or both? Then you need to take a look atall their industry keywords, and more importantly,you really want to break this down into which keywordswere a priority and which ones they wanted tobe found for on LinkedIn.Then using the FREE Google Adwords KeywordsTool, you rank these keywords (and subsequent synonyms)in terms of the number of searches made.Why do you need to do this? Because now you havethe most common search keywordsand synonyms being usedfor the industry keywords that youhad first set up.Then you go back and startagain with the LinkedIn Summaryand the Experience sections. Rememberingthey have a maximumcapacity of 2,000 characters each(so make sure you use it all!),you get busy writing. Here’s atip: Don’t forget the headline keywords either. It’simportant to make sure that all the consultant profilestold people what the company did, who theyrecruited for and the sectors they worked in - withthe added bonus that you now have all the keywordsadded in there as well.Moving along, you need to do the same thing forthe company page (albeit with a slightly differentstrategy).The results were immediate. The consultants sawan immediate increase in their profile views - someas much as tenfold over the next two days. 10x morepeople viewed their Linkedin profiles after adding thecorrect keywords to their LinkedIn profile. This levelof profile views then leveled out a little over the nextfew weeks, but stayed significantly higher than it wasbefore this project was started. And as the keywordschosen were relevant to their industry, it was clientsand candidates that started to make contact with theconsultants. This was a real accelerant to growingDo you get leads from LinkedIn?In my view LinkedIn is a great professional network.their LinkedIn networks. The LinkedIn CompanyPage also started to get more visitors, both directlyfrom search and indirectly from people clicking thecompany links on the consultant’s profiles. This resultedin more people following their company onLinkedIn (one of the primary objectives).Of course, there were other additional strategiesemployed around this LinkedIn improvement strategylike a content strategy, posting update strategy,sharing content, adding multimedia to profiles andmarketing personal and company profiles better. Butthe fundamental building blocks around the successwas built around making sure the keywordswere right in the first place, andwere in line with the objectives of usingLinkedIn as a core recruitment attractionand search tool.What does all of this mean for you andyour company? It means that you canand should be getting more out of LinkedIn.Hopefully reading this column willmotivate you to re-visit your LinkedInprofile, and check out your text and keywords.You may even update it. If you do take thetime to utilize this advice, here are the action pointsthat you need to take:• Understand what keywords you want to befound for.• Work out the most important ones and theirsynonyms.• Add them across your LinkedIn profile, includingthe Headline.• Add them to your Company Page as well (ifyou have one).• Watch your profile views rise accordingly (ifyou got the keywords right, of course!).Time is a wasting. Are you on LinkedIn yet makingthese updates. If not, you really should be. ❖Michael Hammond is chief strategy officer at PROGRESS in Lending Association and the founder andpresident of NexLevel Advisors. NexLevel provides solutions in business development, strategic selling,marketing, public relations and social media. He can be reached at mhammond@nexleveladvisors.com.27Tomorrow’s Mortgage Executive

Successful LeadershipIn Timesof ChangeIf you are to effectively leadthis change it is critical thatyou recognize your style andapproach as well as that of othersenior managers in your business.BY BARBARA PERINOAND REBECCA WALZAKare now in the lastWe half of the year andthe mortgage lending communityis in the throes ofpreparing for the processchanges based on the CFPBrequirements that take effecton January 14, 2014. Howare you as a leader able tomaneuver theses changeseffectively? How can you dothis with as little disruptionas possible to the peopleand the workflow while ensuringbusiness success?29 Tomorrow’s Mortgage ExecutiveTomorrow’s Mortgage Executive 30

This article is focused, not on thechange itself but the personalities thatare leading the change and how each ofthese distinct leadership personalitiescan best deal with the inevitable questions,concerns and fears dwelling underneaththe surface changes.There are three distinct personalitytypes most frequently found in businessleaders during a significant periodof change.“The Bold” –are people who areout front and center around creatingnew ideas, innovative thought processesand embracing change. The Bold donot want to be left behind. They canbe somewhat risk tolerant, able to takechances and think “just do it,” but theytypically go through a thought processwhile they are implementing thechange. They are very open to tryingsomething new or different if they seevalue in the process. They show up inthe world as highly confident, outgoing,active and sometimes impatient.“Steady As We Go” - are peoplewho are all right with change and innovationif they feel comfortable afterthey’ve completed a lot of research,asked questions and educated themselvesthoroughly on what they feelthey needed to know about how thecompany is going to be impacted withthe change. They are typically cautiousin nature, so they will take a bit moretime to come to the conclusion thatchange has to happen. They are alsogood listeners, practice patience andappear more quiet spoken.“Don’t Rock the Boat” – are peoplewho hold on to tradition and are somewhatrisk adverse in their thinking.They are highly competent when itcomes to strategic thinking and maintainingthe status quo on well-provenmethods of doing things, and they resistchange unless they are convincedIt’s important to understand howyou process and implementchange so your message isconveyed clearly, conciselyand openly throughout yourorganization.it’s for the good of the company. Andthen they are reluctant to move quickly.Sometimes these personalities are accusedof being in a time warp, refusingto seek better and more efficient waysof doing things. The persona is suchthat they have to be pulled, kicking andscreaming to “do it” differently.Which are you? You may have characteristicsof all three traits, but one thatis most prominent. If you are to effectivelylead this change it is critical thatyou recognize your style and approachas well as that of other senior managersin your business. For example, if youare a Bold leader, but the head of yourrisk management and compliance areais a Don’t Rock the Boat type, it is importantthat you recognize this. Tryingto force new ways of doing things andimplementing the use of untried technologymay just result in a stalemate.Other items of importance.It’s important to understand how youprocess and implement change so yourmessage is conveyed clearly, conciselyand openly throughout your organization.It’s also important that you havea clear understanding that staff is madeup of these types of personalities aswell. Knowing ahead of time that thereis a blend of how people process changeis vital for your company to be successfulin implementation of the changescoming. Some folks will manage andembrace change easier and faster thanothers. There will be those who needto know more facts and need time toprocess and they probably will be askingquestions for clarification and understanding.There will be a few whowill struggle with having to do thingsdifferently and will automatically resistit. If you are aware ahead of the time,that not all people are the same whenprocessing change, the better off youwill be and this will give you the opportunityto have conversations thatdispel fear and resistance.Conveying the message.How you convey a message aroundchange needs to be understood so thateveryone will get on board on whatneeds to be done. This will help alleviatestress, fear and resistance. Yourmessage should reflect and acknowledgethat “not everyone has an easytime with change, but it has to happenbecause of these new regulations and“as the leader of the company, my goalis to make this as seamless and transpar-31Tomorrow’s Mortgage Executive

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Conducting a strategic planning meeting withkey senior management with the focus onthe upcoming CFPB changes is crucial.ent as possible.” Suggestions shouldfollow this comment – “what kind ofquestions do you have?” or “what doyou need from the leadership team tosupport you as we maneuver throughthese changes?”Conducting a strategic planningmeeting with key senior managementwith the focus on the upcoming CFPBchanges is crucial. It’s important thateveryone on the leadership team understandshow the new rules are goingto impact the company and whateveryone’s roles and focus is goingto be to get ready. Asking the questionof each senior manager how theydeal with change would be helpful sothere is clarity and understanding ofeveryone’s thought processes, whichin turn can create clarity and focus onthe goals. During this meeting, ideasshould be allowed to be shared evenif they won’t necessarily be implemented.The next step is to conduct ameeting with middle-level managersto get their buy-in on what the leadershipteam is implementing. Again,finding out how middle-level managersprocess change is also important asthey convey direction and communicationdown through the ranks. Helpingthem deal with changes that haveto be implemented, letting them sharewhere they need guidance, supportand clarity around where the companyis going is key to the success of what’sgoing to happen. Another suggestionis conducting a town hall meeting(s),(depending on how large the companyis and where people are logisticallylocated) for/with staff is a suggestionthat might be effective in determininghow to convey the message of whatwe need to do as a company to abideby the new rules of the CFPB that needto be implemented. The more you canshare and get buy-in and agreementfrom everyone, the easier the processshould be.Creating internal committees tofocus on particular tasks that needto be put in place or changed is onesuggestion. These committees shouldbe comprised of a leadership person,middle-level managers and staff thatmeets regularly, brain storms, communicatesand allows for all ideas tobe heard. FYI – younger generationsexpect this type of leadership. Thiscreates engagement of various people,who take pride in what they are doing,are made to feel important and whotake ownership and responsibility fortasks and goals that get done.Some steps to take on implementingchange could include:• Establish the criteria by defininggeneral characteristics that a solutionshould have• Be objective• Try to keep it simple, but includecriteria that is needed or desired• Develop an action plan• Goals• Strategy behind• A timeframe – including howoften should you meet to stayon track?• Define who is responsible forwhat• Define expected outcome• Decide how you will knowwhen the implementation iscompleteAbout the AuthorBarbara Perino is Director of Business Development forDirect Valuation Solutions a new cloud based technologyplatform that is designed to streamline and enhance theappraisal fulfillment experience. Barbara has 23 yearsof extensive sales and sales management experiencealong with operational knowledge from all facets withinthe residential property valuation industry. She is also aprofessional certified coach.About the AuthorrjbWalzak Consulting, Inc. was founded and is led byRebecca Walzak, a leader in operational risk managementprograms in all areas of the consumer lending industry. Inaddition to consulting experience in mortgage banking,student lending and other types of consumer lending, shehas hands on practical experience in these organizations aswell having held numerous positions from top to bottom ofthe consumer lending industry over the past 25 years.The mortgage industry is a resilientindustry and I daresay it has gonethrough drastic changes over the pasteight years. The CFPB’s upcomingrules are simply part of the newchange hitting the space, with a focuson protecting the consumer, which weshould have done in the first place.Just a thought. 33Tomorrow’s Mortgage Executive

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Whether your compliance is in-house oroutsourced, time is precious when it comesto implementing the CFPB’s rulemakings.July 2013 marked the third anniversary of theDodd-Frank Act and the second anniversary ofthe Consumer Financial Protection Bureau’s(CFPB) inception. What has changed?In some ways, things remain constant when it comes tocompliance concerns – lenders worry about implementingmajor regulations, and the pace of change comes very quickly.Top Compliance ConcernsBy Leonard Ryan35 Tomorrow’s Mortgage ExecutiveTomorrow’s Mortgage Executive 36

The industry is still plagued by theCFPB’s quick rule announcements andeven quicker implementation dates twoyears later. Mortgage professionals arestrained in their adoption, updating andimplementing periods due to the sheeramount of mandates, details and datesthat require them to cooperate. Arelenders warranted with these concerns?How can the bureau co-function withpeople and organizations that are uneasyabout every announcement theymake?There is one date that looms mostominously for many lenders. On January10, 2014, many of the CFPB’s mostsignificant recent announcements gointo effect. Between now and then,lenders must adjust their operationsto not only comply, but improve theircompliance practices so subsequentrules implementations are implementedas smoothly as possible.The industry is still plaguedby the CFPB’s quick ruleannouncements and evenquicker implementation datestwo years later.Understanding the top priorities iscrucial to a smooth compliance process.In its annual survey of mortgagecompliance concerns, QuestSoft foundthat, unsurprisingly, the most stressfulregulations have remained consistentover the past few years. A deeper lookinside the results brings to light severalissues that lenders will be trackingclosely over the next few months.TIL/GFE: Where is Lender Transparency?Sometimes, the more things change,the more they stay the same. Accordingto QuestSoft’s annual compliancesurvey, in 2010 more than 420 lendersranked their top compliance concern asfee tolerance changes to the Real EstateSettlement Procedures Act (RESPA).The same survey conducted a yearlater, found the Dodd-Frank Act asthe greatest compliance concern; followedby the combined Truth in LendingDisclosure (TIL) and Good FaithEstimate (GFE) form in 2012. The top2013 compliance concern should comeas no surprise: the TIL/GFE and otherCFPB-related rulemakings once againtake this year’s prize as top concerns.The combined TIL/GFE disclosureform was ranked as a 58.8 percenthigh concern among lenders. TheCFPB united the forms to provide atransparent way for borrowers to bothcomparison shop different loan offersand to better understand their financialresponsibilities towards the loan andclosing costs. While the CFPB hasdone a good job being transparent inthe revision process, offering multiplerevisions online for commentary; theystill have not announced what the finalset of new forms will look like, norhave they published the implementationdeadlines or details concerningnew standards.37Tomorrow’s Mortgage Executive

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RESPA FEE TolERAncES:EliminATE SuRPRiSESFoR BoRRowER, inducEHEAdAcHE FoR lEndERTransparency is a recurring themethat has gained significant tractionwithin the mortgage lending industrysince the financial meltdown. Consumersare shown upfront what exactlytheir loan will cost them, and lendersare required to strictly adhere to theprovisions laid out for them.RESPA fee tolerances were rated a49.7 percent high concern in Quest-Soft’s same survey. If the settlementcharges exceed the RESPA Reformtolerance category outlined on the borrower’sGood Faith Estimate (GFE),they are legally required to reimbursethe additional charges; adding additionalstress to the lender, slowing businessprocesses or worse, jeopardizingcompliance.According to the Federal Reserve,these “tolerances” associated withthe RESPA Reform Rule were implementedto limit the amount actualsettlement charges can vary at closingtime – making closing time stressfuland somewhat of a gamble.Fees are divided into three categories:1. Zero tolerance – Thesefees cannot change frominitial disclosure to fundingexcept in rare cases.2. Ten percent tolerance - Thesefees are normally associatedwith originator required settlementservices, but also includeother categories includingsome government charges.3. No tolerance – These feesare not subject to anytolerance restrictions.Digging deeper into the survey withpersonal calls to respondents, Quest-Soft found that while there are a numberof issues with zero tolerance fees,the largest problem is clearly with inaccuratedisclosure of third party fees.Additionally, while significant RESPAfee cures happen in all sizes and typesof lenders, it seems the most prevalentand costly cures are more consistent inwholesale lenders as well as nationallenders with small to moderate footprintsin states. One industry expert hasindicated the average cure is still about$75 per funded loan.Unfortunately, QuestSoft does notsee this top concern or the fee cure penaltiessubsiding any time soon. Mostloan software programming resourcesare constantly being redirected to thecontinuous barrage of new regulations,making it difficult to catch up with theslew of new regulations.AnTiciPATingJAnuARy 14, 2014Whether your compliance is in-houseor outsourced, time is precious whenit comes to implementing the CFPB’srulemakings. Consistent industry monitoringand maintaining relationships iscrucial to ensure compliance and avoidaudits. The amount of rules is a burdento even think about complying with, letalone actually achieving total compliance.QuestSoft’s survey respondentsranked CFPB-related rulemakings asa 52.7 percent high concern, secondhighest in the survey.Among the most significant rulesgoing into effect next January, areseven rules, grouped into three primarycategories.undERwRiTing STAndARdSThree of the rules specifically applyto the standards and processes governingunderwriting:• Qualified Mortgage (QM) andAbility to Repay (ATR): Outlineseight criteria for determiningwhether a borrower has the abilityto repay a loan and outlinesa safe harbor for loans that meetthe strict QM standards.• High Cost Mortgage (HCM):This rule expands coverage tomoney transactions and home equitylines of credit (HELOC) andlowers the threshold for coverageas a HCM. The rule also addscounseling requirements for borrowersseeking to close an HCM.• Mortgage Loan Officer (MLO)compensation and Qualification:Transparency is a recurringtheme that has gained significanttraction within the mortgagelending industry since thefinancial meltdown.Sets limits on compensation andestablishes additional qualificationsfor MLOs.SERvicing STAndARdSTwo servicing rulings may provide ahint at the reforms coming to the Truthin Lending Act (TILA) and Real EstateSettlement Procedures Act (RESPA)later this year.• New Servicing Standards –TILA: Servicers must provideadditional ARM adjustment noticesand provide monthly billingstatements in a certain format.• New Servicing Standards – RE-SPA: Servicers must informborrowers if the loan will beserviced by another company atthe closing table, and servicersmust build out more completeprocesses for tacking and keepingrecords of borrower communications.APPRAiSAl REquiREmEnTSThe final two rules going into effectnext January apply to appraisalrequirements.• Appraisal requirements forHigher Priced Mortgage Loans:Outlines requirements for HPM39Tomorrow’s Mortgage Executive

loans, including interior inspectionsand validating that the borrowerreceived the appraisal.• Appraisal Disclosure: Spells outthat in any loan, the appraisalmust be provided to the borrowerat least three days before closing.These rules have become a very highsource of anxiety since their announcement.As a compliance company,QuestSoft has seen an exponential increasein the number of meetings andsupport sessions with clients; mostlyreassuring them with details of ourplans to address the thousands of pagesof new regulations.S.A.F.E. AcT – THEonly BRigHTER SPoTin THE SuRvEyThe QuestSoft compliance surveyshowed a reduction in concern inS.A.F.E. Act licensing and registrationconcerns for the first time in five years.This is reflective in the greater stabilityin the process along with recent effortsby many states to streamline the testingprocess.coPing wiTH cHAngESSweeping change that affects industriesand employees in the marketplace,is never an easy adjustment. However,to streamline the transition, the CFPBannounced its Regulatory Implementationpage, an information tool for lenders,servicers, creditors and borrowersto learn more about each pending ruleand implementation dates in plain language.Through this, the CFPB hopesto ease top industry concerns.Additional concerns found amongstABOUT THE AUTHORLeonard Ryan is president of Laguna Hills, Calif.-based QuestSoft, a provider of automated compliancesolutions and geocoding services to the mortgageindustry. The company’s products enable more than1,700 banks, credit unions and mortgage companiesto simplify the collection, analysis, compilation andreporting of key lending regulatory report data.QuestSoft’s polled lenders includingthe Qualified Mortgage (QM) rule, FairLending exam scrutiny and state consumerlending laws.Transparency, feedback and informationaltools will simplify the implementationprocess ahead of January2014. However, it is up to industry professionalsand organizations to adhereto, update and comprehend the CFPB’srules and fine details in order to betterserve and protect the consumer.2014 will be a year of unprecedentedchange and compliance – are you prepared?Five Brothers GivesYou The Green LightOn HUD Compliance!Hit the road to worry-free FHA property conveyance compliance – no red lights,no detours, no obstructions. With 45 years of FHA experience, plus innovative,field-proven technologies, Five Brothers puts you in the driver’s seat.• Reduced Penalties – through our compliance-trained nationwidefield service team• Lower Costs – with advanced Bid Validation technology• Greater Peace of Mind – with automated HUD P260 bid data entry• Error-Free Results – through our ClaimSys HUD claims processing systemExperience the Five Brothers difference… stronger results from the ground up. www.fivebrms.com • 855.552.802041Property Preservation • Inspections • Valuations • REO Asset Management • Hazard Claims ManagementTomorrow’s Mortgage Executive

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Documentation inthe new worlDMakeno mistake, the newregulations hitting ourindustry will place a strongeremphasis on documentationBy Scott K. StuckyPicture this: You’ve followedthe ConsumerFinancial ProtectionBureau’s (CFPB) eight Ability-to-Repay (ATR) underwriting factorsunder the ATR/Qualified Mortgage(QM) rule. Your documentationprovider has kept track of the ruleand its guidelines, preparing youfor each loan – QM, non-QM orboth – your staff will originatefrom January 2014 and beyond.But something went wrong andyou just received a “Notice of ReasonableCause” from the CFPBand your company will soon facea visit from federal regulators andCFPB examiners.Or you could just be due a regularlyscheduled audit.Regardless of the purpose of anexaminer’s visit, gathering the informationneeded and being able toverify loan information could spellthe difference between a hassleand a nightmare.The sophistication of a lender’sdocument system is key to provingto an examiner that the loan inquestion was in fact what you sayit is.QMs definitions are not specificallytechnology-related. The standardsare simply a set of guidelinesthe industry must abide by andadopt into processes. However, acompany’s compliance with therules’ standards is technologyrelated.System updates are notenough to comply with the newworld of compliance and rulesgoing into affect in January 2014.Documentation, vendor relationshipsand data integrity are componentsthat need to be updated andimplemented in order to guaranteecompliance and decrease yourcompany’s chances of having toprove yourself and business to anexaminer.The most critical component ofthe ATR/QM rule is the underwriting.The industry took a nosedivein 2008 after years of loose underwritingpractices, defaults andbuybacks. To try and ensure afinancial meltdown of this calibernever happened again, Congresspassed the Dodd-Frank Wall StreetReform and Consumer ProtectionAct in 2010 and implemented theCFPB in 2011 to safeguard consumersand regulate the companiesthat sell financial services products.Although the ATR/QM ruleprovides eight factors an originatormust consider when making aQM loan, the rule does not forcecompanies to follow particular underwritingmodels.That decision is deferred to thecompany in order for it to achievestrategic and revenue goals.Instead, QM divides loans intotwo categories of liability. The first43 Tomorrow’s Mortgage ExecutiveTomorrow’s Mortgage Executive 44

provides a “safe harbor” protection forqualified mortgages that are not categorizedas “higher-priced” – definedby the 2008 Federal Reserve BoardTruth-in-Lending amendments. This“safe harbor” will exempt lenderswho have originated loans accordingto the QM/Ability-to-Repay standardsfrom litigation by the borrower.Lenders are free to make loans outsideof the QM guidelines, but thesemortgages will receive a rebuttablepresumption of compliance. Loansoriginated outside of QM will notexempt lenders from litigation; insteadthey will be presumed to havereviewed the borrower’s ability torepay.The eight factors the CFPB requiresoriginators to assess will help themdetermine a borrower’s ATR. An ATRevaluation must address the followingfactors:• Expected income or assets(other than the value of theproperty that secures the loan)that the consumer will rely onto repay the loan;• Current employment status;• Monthly mortgage paymentfor this loan;• Monthly payments on any simultaneousloans secured bythe same property;• Monthly payments for propertytaxes and insurance thatthe consumer is required topurchase;• Any debt, alimony and childsupportobligations;• Monthly debt-to-income (DTI)ratio or residual income; andmost importantly,• Credit historyMany existing underwriting policieswill already meet the standardsoutlined for determining ATR. However,in order to best protect againstpotential litigation, disclosures, closingdocuments and policies mustSystem updates are not enoughto comply with the new world ofcompliance and rules going intoaffect in January 2014.clearly document how each of thesefactors support an underwriting decision.In this era of new regulations,examiners and consumer watchdoggroups, documentation is the answer.A company must take the necessarysteps to prevent buybacks and implementprocesses that leave a pristinepaper trail of documentation.The system of record for underwritingis critical in order to preventbuybacks and prove compliance withATR/QM rule mandates. The ATR/QM rule provides lenders legal protectionprovided their disclosure andfinal forms match what the system ofrecord shows. One of the challengesmany mortgage document programshave is that loan officers can changeinformation in the documents whichdo not get transferred automatically tothe LOS, creating potential for incorrectdocuments and errors between theunderwritten file and the documentation.Conversely, lenders can leveragesecure document systems thatuse XML to automatically populatechanges made in the LOS into theloan documents and lock the actualdocuments from being changed inappropriately.Accurate disclosures for the borrowerare the most important pieces ofthe rule implementation and compliancepuzzle. Redundant and confusingdisclosures to apply for and closeon a mortgage prompted the CFPB tosimplify the two most important stepsof the mortgage process for the borrower.The Loan Estimate form – or theTIL/GFE disclosure – will help borrowersunderstand their mortgagefeatures – the costs, interest rate,risks – and it will be provided to themwithin three business days after theyapply for a loan. The new disclosureform, which is being mandated by theCFPB and is expected to be implementedlater in 2014, is designed toprovide disclosures and make sense ofall the costs of the transactions, alsogiven to the borrower within threebusiness days before they close on theloan. Lenders can rely on specializedIn this era of new regulations,examiners and consumer watchdoggroups, documentation is theanswer. A company must takethe necessary steps.third-party providers to assist with theforms’ drafting, strengthening compliance,documentation and borrowersatisfaction.The watchful eye of the CFPB will45Tomorrow’s Mortgage Executive

transform into a microscope by January2014. The bureau is already crackingdown hard on lenders that are inviolation of current effective rules,setting the stage for its authoritativecontrol when additional mortgagerules are implemented.Everyone needs a backup strategy,especially those in the mortgage lendingindustry. Documentation is thefoolproof strategy that will enablelenders to store and access any form,at any time, regarding a borrower’sloan in case an examiner comesknocking. The technology supportingdocumentation can also help lendersmake the switch to eDocs, even if theinitial forms were signed the archaicway on paper. Accessible, compliantdocuments are no longer found in amanila folder.Documentation breeds data integrity.Strong integrations result in strongdata that can withstand an examiner’skeen eye. Third-party verification caneliminate the chances of post-originationissues and buybacks, and can alsoidentify mistakes before a deadline orexaminer visit. When LOS systems,document software and complianceprograms all work together to ensuredata integrity, the chances of improperlydocumented loans drops to nearlyzero.System updates will not suffice inthis new day and age of regulationsand examinations. LOS updates,ABOUT THE AUTHORScott K. Stucky is chief operating officer of IdahoFalls, Idaho-based DocuTech Corp. Since 1991,DocuTech has provided compliance services anddocumentation technology for the mortgage industry.DocuTech’s software interfaces with leading loanorigination systems (LOS) and enables mortgage professionalsto generate documents locally. DocuTechmanages and secures all information needed for aloan, guaranteeing accuracy, security and compliance.maintaining third-party relationshipsand utilizing document providers formore than just what their name implies,will enable lenders to correctlycross system check data and provetheir documents are pristine and accurate.The importance of QM and combineddisclosures like TIL/GFE are toprevent past mistakes, to protect theconsumer and reestablish confidence.Document your past to secure yourfuture. NEXT-GENERATIONBPOsWith extensive real-estate market insight, plus advancedvaluation and results-validation technologies, Five Brotherstakes BPO efficiency and credibility to a whole new level.Application is fast and seamless – BPO results can be automaticallypopulated on Fannie Mae, Freddie Mac and other valuation forms.All of our web-based/downloadable BPOs include:• Probable sale price and 90-day quick-sale price,plus “As-Is” and “As-Repaired” values• Neighborhood, zip code and comparables pricing data• Detailed property mapping and geocoding• Interior/exterior photos, including aerial imageryExperience the Five Brothers difference… stronger results from the ground up. www.fivebrms.com www.fivebrms.com • 855.552.8020Property Preservation • Inspections • Valuations • REO Asset Management • Hazard Claims Management47Tomorrow’s Mortgage Executive

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COLOR COMMENTARYVeteran financial services journalist Phil Hallhas joined the PROGRESS in Lending team andhe isn’t holding back in sharing his views.We Hall on our team. While otherat PROGRESS in Lending feelvery fortunate to now have Philmedia companies in the mortgage lending spacerestructure and downsize, PROGRESS continuesto grow and opportunistically add very talentedcolumnists. Phil Hall was born in1964 in theBronx, N.Y. He was educated at Pace University,receiving a B.A. in journalism. Phil began hisjournalism career as United Nations reporterfor Fairchild Broadcast News. He also servedas associate editor of ABA Banking Journal,and editor at Secondary Marketing Executive/Servicing Management/MortgageOrb. Phil isnow a featured columnist for PROGRESS wherehe writes, among other things, a weekly columndubbed Color Commentary. In this interviewhe talks about his decision to join PROGRESSand where he sees the mortgage industry going.Executive Interview49 Tomorrow’s Mortgage ExecutiveTomorrow’s Mortgage Executive 50

Q: What do you personally bring toPROGRESS in Lending? In other words,what can people expect from yourwriting?PHIL HALL: They can expect the observationsand considerations of someonewith a quarter-century of involvementin the financial services industry. Idon’t believe in taboos and, being awriter (as opposed to being a mortgagebanker), I have the luxury to speakabout these industry-related matterswith as much frankness and sincerityas my English skills allow.But I am not coming to PROGRESSwith a particular political agenda. Iconsider myself an equal opportunityoffender – anyone who screws up, regardlessof their political party, will becalled to question. But I am also notthe old grouch on the hill – anyonewho is deserving of praise will receiveit.Q: Describe the genesis of your ColorCommentary column. How did thename come about? What driving principles/ideasguide you in your writingof this column?PHIL HALL: Prior to joining PROG-RESS, I was one of the authors of acommentary blog that was publishedon the MortgageOrb website. Someyears before that, I had a marketingcolumn in the now-defunct CreditUnion News. In both cases, I wrappedthe trends and issues facing the financialservices world with my insight onthe subjects that I was addressing.The name “Color Commentary”was chosen because I have a tendencyto offer (dare I say?) a colorfulspin on whatever I am writing about.Some people are not very comfortablewith that, and I have received my fairshare of negative comments related tomy opinions. I always find that kindof feedback to be therapeutic – lifeI don’t believe in taboos and,being a writer (as opposed tobeing a mortgage banker), I havethe luxury to speak about theseindustry-related matters with asmuch frankness and sincerity asmy English skills allow.would be somewhat monotonous if weall agreed with each other.Q: In some of your columns you havetaken the Obama administration totask. What grade would you give theadministration in its dealing with themortgage meltdown and its aftermath?PHIL HALL: I would give it an F – eventhe president admitted in August 2011that his policies were not working. But,ultimately, I give the American publican F for not holding the administrationto task. The administration does notexist in a vacuum – it is, in concept,beholden to the American public, andthe public has mostly been indifferentor oblivious to how the administrationhas reacted to this particular crisis.Q: If we talk specifically about newindustry regulation, some say that theindustry is becoming too regulated.What’s your take?PHIL HALL: The problems with theregulations are that they do not addressthe core weaknesses that contributedto the 2008 crash. Communitybanks and credit unions playedno role whatsoever in the debacle offive years ago, yet they are now saddledwith the Dodd-Frank regulatoryweight and they have Mr. Cordray’sauditors tapping at their doors.Likewise, the failure of Fannie Maeand Freddie Mac occurred despite thepresence of a regulatory body – theOffice of Federal Housing EnterpriseOversight – that all but stood by andallowed these entities to crash. Thus,my concern is not too much regulation,but a deficit of intelligent regulation.Q: As we all know, rates are risingagain. Are lenders ready to transitionback to a purchase market?PHIL HALL: They always were, but wehave to stop subscribing to the theorythat housing fuels the American economy.I believe that a more accurateview is that housing is a reflection ofthe American economy – and our currenteconomy is fairly shabby at toomany levels. Any purchase market thattakes shape now will not be a healthyone, simply because the financial ingredientsare not in place to encourageit. With the Fed propping up the economy,with wages remaining stagnant,with new jobs being focused on thelow-end and with a young generationmanacled in outrageous student debt,we cannot possibly imagine a purchasemarket to magically reanimatethe economy. This is like scatteringseeds in a rock garden and expectingan explosion of rose bushes – if theseeds have no place to take root, nothingwill flower.51Tomorrow’s Mortgage Executive


Q: Some say that because rates havebeen so low for so long, once we returnto a purchase market it will be quitesome time before refinances comeback. What do you think of the natureof the mortgage space going forward?Will we continue to go through cyclicalrefinance and purchase periods asmany are used to or are we headed fora more prolonged purchase market?PHIL HALL: Again, it depends on thestate of the wider economy. If we havea genuine recovery and not the currentwet fart that some uber-optimists considerto be a recovery, I think we willsee a prolonged purchase market. Butthere are so many issues that need tobe addressed – not the least being theQE-Forever policies of the Fed, despitethe grand talk of “tapering” – thatI believe a prolonged purchase marketwon’t happen for some time.Q: Another cause for concern is that thegovernment still controls the secondarymarket. Do you see that changingany time soon? Talk a little bit aboutwhat you think needs to happen to getprivate investors active again.PHIL HALL: The partisan division inCongress will not allow any of the currentsecondary market reform proposalsto take shape. But, then again, havingone party control both the WhiteHouse and Congress is no guaranteethat it will happen – lest we forget, Mr.Dodd and Mr. Frank wrote a 2,300-page bill when their party ruled theroost at both ends of Pennsylvania Avenue,yet they intentionally left GSEreform out of that bill.Private investors are coming back,albeit slowly and with a surplus focuson the jumbo mortgage market (which,of course, is outside of the Fannie andFreddie sphere). But, of course, thelack of certainty on the future of theeconomy – especially on Federal Reserveactions – will keep many investorson the sidelines.I have been a longtime advocateof creating a covered bond market inthe U.S. as a parallel channel to thetraditional secondary market. This hasworked for years in other countries,and it would certainly open a newinvestment channel that could flourishdomestically, but the attempts to createthe regulatory framework of thismarket have never gained traction. Inmy view, that has been one of the biggestmistakes of recent years.Q: How would you characterize thestate of innovation in the mortgagespace today?PHIL HALL: If you define “innovation”as the creation of new products andservices – both loan offerings and thetechnologies required to make themwork – it has been peerless. At everyindustry trade show I attend, I amalways introduced to marvelous ideasand systems that confirm the mortgagespace is in constant positive motion.If you define “innovation” in termsof marketing, I think we need a bitmore work. The industry was behindthe curve in terms of embracing newmarketing strategies, especially Netbasedapplications. But, then again,many of these applications evolvedduring the aftermath of the 2008 crash,so one could excuse the industry forbeing preoccupied with matters notrelated to marketing.Q: Looking back, how has the mortgageindustry changed since you firststarted reporting on the space?PHIL HALL: My very first article that Iwrote as a financial journalist – backin 1988 for the ABA Banking Journal– was on reverse mortgages. After Ifinish this article, I am starting a newarticle...on reverse mortgages! Gofigure! IndustryPredictionsINSIDER PROFILEPhil Hall is a financial journalist who previously worked asthe editor of MortgageOrb, an associate editor at the ABABanking Journal and a columnist at Credit Union News. Hiswriting has been published in the New York Times, Wiredand the Hartford Courant. He is also a marketing andpublic relations expert, an entrepreneur and horror movieactor (yes, we’re not joking about that last bit). Lastly, asyou will discover, he is not shy about stating his views.Phil Hall thinks1. I think that we will seemore online originationsand fewer branch-basedtransactions. I suspect thatmany lenders, particularly inthe community banking space,will begin to retreat fromresidential mortgages due to avariety of problems – they willfocus on commercial lendingand other activities where theycan function without beingunder the regulatory burdenassociated with home loans.2. I also believe that we willsee a greater emphasis ongreen building practices – notso much in regard to thedeployment of renewableenergy solutions on housing(that is still too expensive formost people), but in a greaterfocus on energy efficiencysolutions in the constructionand maintenance of residences.3. Of course, five yearsfrom now will be the tenthanniversary of the 2008 crash.And 2018 will put us threedecades beyond the heart ofthe savings and loan crisis. AsNietzsche said, “That whichdoes not kill us makes usstronger.” Of course, Nietzschenever originated a 30-yearfixed-rate home loan...butthat’s another story!53Tomorrow’s Mortgage Executive

INTERESTRATES AND OURECONOMYHigher home pricesand the rise in interestrates are beginningto impact homeaffordability—especiallyin high-cost regions.By Ray BrousseauSince June, the U.S. mortgage market hasexperienced some significant volatility interms of rates available to consumers, raisingconcerns for both home owners and professionalsabout the outlook for the balance of thisyear and next. However, interest rates are close tothe levels seen in 2011, making them still low byhistorical standards. Rising rates affect consumers andindustry professionals like homebuilders differently.Pending home sales dropped off in June after reaching their highestlevel in more than six years as rising mortgage interest ratesbegan to impact the market, according to the National Associationof REALTORS. Higher home prices and the rise in interest rates arebeginning to impact home affordability—especially in high-cost regions,according to Lawrence Yun, chief economist at the NationalAssociation of REALTORS. “Mortgage interest rates began to risein May, taking some of the momentum out of contract activity inJune,” he said. “The persistent lack of inventory also is contributingto lower contract signings.”55 Tomorrow’s Mortgage ExecutiveTomorrow’s Mortgage Executive 56

From an operational perspective,here’s how we at Carrington look athow the cost of rising interest rateswill affect the new loan originationmarket. The industry did about $995billion in total originations throughJune, according to the MortgageBankers Association. Roughly 70percent of this volume went throughFannie Mae and Freddie Mac, about13 percent through the FHA, 7 percentwere VA loans, 9 percent were coveredby primary mortgage insurance,and the remaining 1 percent of loanswas in non-agency originations.Mortgage originators face a challengein the second half of 2013 asrefinance volumes are expected to fallrapidly. The MBA estimates that totaloriginations for 2013 will be just $1.6trillion, implying only $650 billion innew loan originations in the secondhalf of 2013. Whereas the industryaveraged about $450 million per quarterin total originations in the first halfof 2013, the quarterly average for thesecond half will be closer to $350 billionand falling. For 2014, the MBAis projecting total originations of just$1.1 trillion or an average of about$250 billion in new loan originationsper quarter.Moves in market interest rates tendto not affect the cost of lending nearlyas much as the headlines may suggest.In fact, since Fed Chairman Ben Bernanke’sJune press conference, whenthe central bank suggested an eventualchange in policy, benchmark rates inthe secondary market for mortgageshave largely retraced ground lost. Theyield on current production GNMAsecurities, for example, is now almostat the same yield as before the Fed’sJune press conference.Yet for consumers, the cost of loansis well above the lows seen in 2012.The average interest rate for a 30-yearfixed-rate loan was around 4.39% atthe start of August, up from 3.55%the year before, according to FreddieMac. There are many reasons whythe overall cost of mortgage loans ishigher than a year ago. Interest ratesare just one of several factors whichMortgage originators face achallenge in the second half of 2013as refinance volumes are expectedto fall rapidly.contribute to overall lending costs.One of the largest impacts on thecost of mortgage credit for consumershas been change to MIP, both the substantialincrease in premiums coupledwith most premiums now remainingon the loan for its term as opposed totemporarily. These items now have amuch greater impact on APR (can be30-40 bps depending on loan terms).Earlier in the year we also saw GFeesincrease, having a similar (but lessdramatic) effect. Add all this to anincreasingly complex regulatory environmentand looming changes (QM)causing lenders to beef up compliancestaff, and you have greater coststo originate and less likelihood thatlenders can absorb those costs withoutpassing them on.New rules requiring higher bankcapital will also affect the price ofcredit for consumers as banks avoidmortgage securities and loans withhigher risk weights under the Basel IIIframework. For example, under BaselIII banks must now put up capitalagainst exposures to the FHA eventhough the agency’s obligations arefully guaranteed by the US government.“Weaker bank demand, evenwith average yields up almost 1.4 percentagepoints from this year’s lows,is hampering the $5.5 trillion [mortgageagency] market, increasing borrowingcosts for consumers seeking tobuy homes or refinance,” Bloombergreports.Over the next year, consumers andmortgage executives alike should expectto hear a lot of noise coming fromWashington. Changes in interest ratepolicy from the Fed as well as proposalsto alter the structure of the U.S.mortgage market will all add to uncertaintyin the markets. What we know isthat the historically low interest ratesof the past five years are not likely tocontinue indefinitely. The good newsis that the cost of mortgages is still57Tomorrow’s Mortgage Executive

elatively low by historical standards.The bad news is that new rules andregulations are adding significant additionalcosts to the mortgage lendingprocess.All that said, the outlook for thehousing market remains far brighterthan at any time since the market crisiserupted in 2007. When Fannie Mae releasedits July national housing survey,the percentage of respondents who believenow is a good time to buy a houserose to 74 percent. Even after the recentrun-up in mortgage rates, consumersOver the next year, consumersand mortgage executives alikeshould expect to hear a lot ofnoise coming from Washington.still want to buy a home. In fact, morethan half of all consumers surveyed —a whopping 62 percent — expect mortgagerates to keep rising over the nextyear. And yet they’re still eager to buy.Finally, we should always rememberthat rising interest rates, after years ofartificially low credit costs maintainedby the Federal Open Market Committee,is a sign that the economy is recovering.Back in July, Federal ReserveChairman Ben Bernanke claimed thefinancial tightening that has accompaniedthe recent rise in interest rates is“unwelcome,” and laid out three reasonsinterest rates have risen in recentweeks. One reason Bernanke cited toexplain higher interest rates is “probablythe unwinding of leveraged andperhaps excessively risky” positions inthe market.“It’s probably a good thing to havethat happen, although the tighteningthat’s associated with [deleveraging]is unwelcome,” Bernanke said. Thebenefit, however, is that some of theconcerns of building risks in the financialsystem fueled by the Fed’s easymoneypolicies have been mitigated,he said, making some Fed officialsmore comfortable with the Fed’s $85billion-a-month bond-buying programgoing forward. Another reason forrising rates, Mr. Bernanke said, is bettereconomic news. “As investors seebrighter prospects ahead interest ratestend to rise.”Let’s hope Chairman Bernanke isright about the US economy. About the AuthorRay Brousseau is Executive Vice President at Carrington Mortgage Services, LLC, MortgageLending Division. A 22-year veteran of managing distributed retail lending operations, Ray joinedCarrington in 2011 and was named the company’s Senior Vice President of Retail Lending. Inthis position, Ray is responsible for all aspects of the retail operation, from origination throughfulfillment, and oversees both centralized and branch sales, as well as operations for the fastgrowingenterprise. Prior to joining Carrington, Ray was the Executive Vice President of Citi’sCitiFinancial Servicing business, where he launched a national organization with 176 service centersin 45 states, which was tasked with servicing over $10 billion of distressed consumer loans.Index of AdvertisersAdvertiser Pg# Advertiser Pg# Advertiser Pg#Associated Software Consultantswww.powerlender.com 20Automated Solutions, Inc.www.asitechgroup.com 26Axia Home Loanswww.axiahomeloans.com 54Calyx Softwarewww.calyxsoftware.com 28Catholic Vantage Financialwww.mycvf.org 60Compliance Systems Inc.www.compliancesystems.com 1Data-Visionwww.d-vision.com 12DocMagicwww.docmagic.com 4DocVelocitywww.capsilon.com 18eLynxwww.elynx.com 10eSignSystemswww.esignsystems.com 8Fiservwww.fiserv.com 6Five Brotherswww.fivebrms.com 41, 47Genpact Mortgage Serviceswww.genpact.com 38LeaderOne Financial Corp.www.l1mortgage.com 24LendingQBwww.lendingqb.com 40Mortgage Banking Solutionswww.lykkenonlending.com 61Mortgage Builderwww.mortgagebuilder.com 34MortgageFlexwww.mortgageflex.com 42Mortgage Networkwww.mortgagenetwork.com 32NexLevel Advisorswww.nexleveladvisors.com 16PaperClip Inc.www.paperClip.com 22Poli Mortgage Groupwww.polimortgage.com 58QuestSoftwww.questsoft.com 46The Turning Pointwww.turningpoint.com 14Velocifywww.velocify.com/tme 48Wingspan Portfolio Advisorswww.wingspanportfolioadvisors.com 5259Tomorrow’s Mortgage Executive

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