May 23: Vendors on the move; warnings about repurchase claims and the impact of forbearance on credit

Besides the use of the word “unprecedented” having become unprecedented, competition between lenders and vendors is just as strong as ever. “Please keep thinking about me while I’m thinking about my business.” What a great line when it comes to competitors complaining about your pricing, your programs, your ops team, your work ethic. A lot has happened in the last three months; As Marcus Lam writes, “There is someone out there who was placed in a coma in 2019 and will be in for one heck of a ride when they wake up.” In the meantime, there’s a lot going on with thoughts on credit and repurchase claims, and vendor developments, and all the while some very clever people are putting out some clever musical videos. Let’s jump in.

Credit

Forbearance, the new “F-word,” has huge financial ramifications for servicers and borrowers. Overseen by the FHFA, Freddie and Fannie weighed in this week, helping clear up some confusion. What about borrowers? Brian Levy, an attorney with Katten & Temple, LLP, advised, “With respect to credit reporting about the use of mortgage forbearance, ‘not reporting negatively’ doesn’t mean ‘not reporting at all.’ People who obtain forbearance (especially anyone who doesn’t really need it) need to know that it still will be reported on their credit record. That was the point of my most recent Levy’s Mortgage Musings. It may not be considered in credit scoring models, but forbearance will appear somewhere on the credit report. So, future creditors can, and likely will, take that into account in making credit decisions.

 

“Given what has happened to the economy (especially for hourly wage workers), it is likely that the vast majority of the borrowers seeking forbearance are in real need. Those people should not have to fear being asked about it the next time they try to get a loan. With a ‘good’ story to tell about COVID related temporary job or income loss, the next loan should be no problem within the guidelines provided by the Agencies this week. (Borrowers need to be 3 months current after forbearance to get a refi or new purchase.) If your story lacks real need, however, well, who wants to lend to that person?” Thank you, Brian.

I have heard from a wide range of folks that credit scores don’t give anyone much predictive information in this market. One could argue that the viral impacts on employment probably bear little relationship to credit score. It will be interesting to see where the CFPB weighs in next month in defining non-QM loans, but gaining in importance in this COVID environment are reserves, LTV, and figuring out if the borrower’s job can be performed remotely. To reduce risk today you need to be a lot more granular in borrower assessment than just meeting agency guidelines (since you are basically guarantying employment/income vs. loan losses if you sell to the GSEs).

Repurchase claims

Just when lenders thought it was safe to go back into the water, talk has swung to repurchase claims. Phil Stein, an attorney with Bilzin Sumberg Baena Price & Axelrod LLP, stated, “A surge in repurchase claims against mortgage originators may be imminent as aggregators and servicers face nonpayment of debt obligations and liquidity shortfalls resulting from an increase in residential mortgage loans put in forbearance.”

(And regarding a lawsuit involving any lender, Phil also writes, “Under appropriate circumstances, it may make sense for an originator or servicer to take aggressive action as a plaintiff, whether it’s to protect itself from imminent and substantial damage or to remedy extensive harm already done to its business by a counter-party’s unjustified actions.”)

Random bits of vendor news

Insellerate hired a New Chief Revenue Officer, the Promotion of New SVP of Sales, and the hiring of two additional AEs to continue its high growth trajectory and to meet the demand for its platform. Amid COVID-19 and these rapidly changing market conditions in the mortgage industry, communication and engagement with your current borrowers and prospective borrowers are vital. Insellerate’s award-winning CRM & Engagement platform delivers multi-channel engagement through text, social media, email, ringless voicemail, and direct mail all from within one unified platform.

Vendorly, an innovative SaaS-based vendor oversight platform for financial institutions, has signed a reseller agreement with risk management company Secure Insight which will help protect Vendorly clients against wire fraud, a key risk to the lending and banking industry. The Secure Insights tool integrates seamlessly with the Vendorly platform so that it combats wire fraud by validating closing agent wire instructions. This alliance demonstrates how Vendorly is dedicated to offering a cradle-to-grave solution for the mortgage banking industry to help address all ongoing risks associated with vendor management. (To learn more, contact Steven Greenfield CMB, Director of Operations for Vendorly.)

CyberCecurity, LLC announced the launch of Turnkey Cybersecurity & Privacy Solutions, LLC (TCPS) offering TURNKEY, affordable cybersecurity and privacy programs for small-to-medium sized mortgage companies. “These are full, comprehensive cybersecurity and privacy packages designed to make building a program much easier with less time and brain-damage. These professional cybersecurity and privacy programs are custom-made for the mortgage industry and are tailored to three different business sizes. All TCPS cybersecurity and privacy programs are built to meet NIST Cybersecurity and Privacy Framework, GLBA, NY DFS 500 and other compliance requirements associated with the mortgage industry.”

Top of Mind has launched PartnerNetwork, a first-of-its-kind solution enabling SurefireCRM users and referral partners (Realtors, etc.) to manage RESPA compliance for co-branded marketing material with ease. PartnerNetwork eliminates the need for lenders to determine cost sharing responsibilities and provides a simple way for lenders to manage and report on both digital and print co-marketing content. Lenders can control originators’ ability to co-brand with marketing partners based on their approach to RESPA compliance and can easily identify partner participants in their database. Marketing partners do not have to repeat the registration process to co-brand with additional lender partners.

Blend announced the launch of its Blend Reporting feature. With many lenders around the country experiencing an unprecedented increase in refi applications (Blend’s platform is up roughly 400% YoY), this new offering provides crucial insights and refreshes underlying data sources every three hours to provide lenders with timely and essential insights into their lending activity. Blend’s Reporting Tools also allows lenders to do the following: Share 30-day application submit rate data with your team to drive volumes if you spot a dip. Answer essential business questions about loan production or team adoption. Download customizable reports formatted with the tailored information to inform core strategies. For details, view the full blog post HERE.

First American Financial recently acquired Title Security Agency, a premier brand within the Arizona real estate community. Specializes in title and escrow services for residential and commercial transactions, Title Security Agency has 17 offices in Arizona. It will become part of the direct operations of First American’s largest subsidiary, First American Title Insurance Company.

myCUmortgage announced partnerships with three new credit unions from across the United States. myCUmortgage is a Credit Union Service Organization (CUSO), wholly owned by Wright-Patt Credit Union. The three new partners joining myCUmortgage are: Estacado Federal Credit Union – Hobbs, N.M., FedChoice Federal Credit Union – Lanham, Md. And SMART Federal Credit Union – Columbus, Ohio. Representing nearly 36,000 members and over $457.3 million in assets, these new partner credit unions are eager to help their members with their dreams of home ownership.

Newfi Lending has named OptifiNow as its integrated cloud-based sales and marketing platform to help manage the growth of their rapidly expanding wholesale mortgage lending business. OptifiNow provides mortgage companies with a comprehensive suite of sales and marketing modules that will manage the growth of Newfi’s wholesale mortgage lending business to manage their mortgage broker base, send targeted marketing messages and monitor performance in real-time. “We’re excited to partner with Newfi Lending and help them as they grow their wholesale business,” said John McGee, founder and CEO of OptifiNow. “Newfi is a tech-focused lender, so we’re confident we can help them scale their sales and marketing operations in 30 days or less.  We combine our cloud-based platform with easy-to-use tools, intelligent integrations and powerful business analytics to deliver a fully configured solution designed for their business.”

OptifiNow announced the unveiling of their Insights onDemand business intelligence engine, a reporting and analytics tool built into their flagship OptifiNow CRM platform. BI Insight combines sales and marketing data managed in the OptifiNow CRM with external data sources to provide a 360-degree view of business performance. Insights onDemand is included with the CRM platform and is provided with OptifiNow’s White Glove custom configuration service. BI Insight can connect to LOS, POS, or other business systems to generate reports and dashboards that augment visibility into business performance and how it impacts revenue generation.

OptifiNow announced that Sun West Mortgage Company (Sun West) has launched their cloud-based CRM and marketing automation platform for wholesale, distributed retail and their all new Home Buyer Connect (HBC) mortgage lending channels. OptifiNow worked closely with Sun West’s sales and marketing teams to customize the platform for each channel. Sun West provided the blueprints for automated email campaigns, business rules and data-driven triggers, which OptifiNow used to implement the platform for their wholesale, retail, and HBC environments.

Newfi Lending is utilizing OptifiNow as its integrated cloud-based sales and marketing platform to help manage the growth of their rapidly expanding wholesale mortgage lending business.

“Newfi Lending had a record-breaking 2019 and we’re looking to continue our growth in 2020. Managing our sales and marketing more efficiently is one of our major New Year’s resolutions,” said Steve Abreu, founder and CEO of Newfi Lending. “OptifiNow has all the sales and marketing automation tools we need. They also have a tight integration with our LOS, which keeps our customer records up-to-date and allows us to track detailed production volume. OptifiNow goes beyond just sales and marketing by giving us real insight on our business performance.”

Newfi Lending has named OptifiNow as its integrated cloud-based sales and marketing platform to help manage the growth of their rapidly expanding wholesale mortgage lending business. OptifiNow provides mortgage companies with a comprehensive suite of sales and marketing modules that will manage the growth of Newfi’s wholesale mortgage lending business to manage their mortgage broker base, send targeted marketing messages and monitor performance in real-time. “We’re excited to partner with Newfi Lending and help them as they grow their wholesale business,” said John McGee, founder and CEO of OptifiNow. “Newfi is a tech-focused lender, so we’re confident we can help them scale their sales and marketing operations in 30 days or less.  We combine our cloud-based platform with easy-to-use tools, intelligent integrations and powerful business analytics to deliver a fully configured solution designed for their business.”

Strategic Compliance Partners (SCP) has announced that it will be combining forces with Offit Kurman to service its mortgage banker clientele.  This change, effective March 1, will augment SCP’s current staff and services with those of Offit Kurman’s Financial Institutions Regulatory practice. It will afford clients the benefits of a flat fee holistic compliance engagement complimented by integration with Offit Kurman, a full-service law firm with well over 200 lawyers, including a Financial Institutions Regulatory practice that represents lenders nationwide. SCP will remain in business focusing on services for brokers and its ShareDiligence vendor management platform.

Are you a skeptic that Fintech, AI, and machine learning are changing MSR onboarding today in the secondary market? Paradatec Inc., provider of AI-based document classification and data extraction technology for mortgage file processing, announced it has achieved 100 Percent automated loan onboarding of mortgage servicing rights (MSR) files, regardless of the size and type of incoming loan portfolios. The company’s AI-based technology allows mortgage servicers to ingest entire loan portfolios in hours instead of weeks. Paradatec’s technology leverages powerful, AI-based text analysis and machine learning tools to convert 100 percent of the information trapped in static loan documents to individual data elements. Its automated loan auditing technology then breaks down every loan into 750 specific document types, eliminating manual filename mapping when onboarding loans. The company’s technology also enables data provided by prior servicers to be automatically audited against incoming documents before being absorbed into the new servicer’s system.

A priest and a rabbi found themselves sitting across the aisle from each other on an airplane.

After a while, the priest turns to the rabbi and asks, “Is it still a requirement of your faith that you not eat pork?”

The rabbi responds, “Yes, that is still one of our beliefs.”

The priest then asks, “Have you ever eaten pork?”

To which the rabbi replies, “Yes, on one occasion I did succumb to temptation and tasted a ham sandwich.”

The priest nodded in understanding and went on with his reading.

A while later, the rabbi spoke up and asked the priest, “Father, is it still a requirement of your Church that you remain celibate?”

The priest replied, “Yes, that is still very much a part of our faith.”

The rabbi then asked him, “Father, have you ever fallen to the temptations of the flesh?”

The priest replied, “Yes, on one occasion I was weak and broke with my faith.”

The rabbi nodded understandingly. He was silent for a little while but then the rabbi says, “Beats the heck out of a ham sandwich, doesn’t it?”

(Thank you, Washington’s Ken L.)

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Reducing Friction”, focused on operations changes. If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)