Origination

Even though the White House is trying to use Fannie Mae and Freddie Mac to prop up the residential mortgage market — including massive loan modifications — their regulator issued a new "Five Year Plan" on July 9 that leaves in place the targeted goal of shrinking each of their portfolios to $250 billion. At the end of May the two, together, boasted $1.6 trillion in on-balance sheet assets. The Federal Housing Finance Agency's five-year plan offers no new major revelations about their future. FHFA notes that Fannie and Freddie "have not met and may continue to be unable to meet many regulatory standards." The two were taken over by the government and placed into separate conservatorships in September.

Fiserv Inc. is updating its Loan Servicing Platform to make it more fully compatible with recent guidelines from the U.S. Treasury Department on home loan modifications. "From its inception the Fiserv platform was the first loan servicing system that was fully capable of supporting the Making Home Affordable modification program," the company said. But now, "in addition, several enhancements are underway, including additional deferred principal functionality, enhanced ability to gather personal financial information, and an [Home Affordable Modification Program]-specific screen to present a full picture of the modified loan," Fiserv said Wednesday. The Fiserv platform offers integrated default management tools that allow servicers to track and study loans being modified with the aim of helping servicers formulate best-option workout scenarios based on operational business rules while meeting HAMP guidelines.

Home purchase activity is at least temporarily on the rise in California, the state's Realtor association said, because of favorable prices, relatively low interest rates and consumer belief that rates will increase in the near future. According to the "2009 Survey of California Home Buyers," 68% of consumers said price declines were the motivating factor in their decision to purchase a home, while 39% said low interest rates helped them move to a better location. There were 23% who said a rate increase pushed them to buy recently. Nearly half of the sales were "traditional market sales," while 38% were real estate owned properties. Just 13% were short sale transactions. The survey also found that those buying REO had the highest level of difficulty in obtaining financing, 8.9 on a scale from 1-to-10; for traditional sales buyers it was 7.7 and for short sales buyers it was 7.6. Fixed-rate mortgages dominated in some cases, with 88% of traditional sales and 75% of short sales being financed with these loans. However, just 43% of those buying an REO property used an FRM. The California Association of Realtors survey said that financial literacy is a problem, especially among those going through the traditional sales process, with 32% saying they did not know or were not sure of their loan terms, compared with 12% of REO and 7% of short sale buyers stating the same thing. First-time buyers had an average downpayment of 19.7%, while repeat buyers put down an average of 28.3%.

After bottoming out the previous week, the Mortgage Bankers Association Market Composite Index increased by 11% on a seasonally adjusted basis, aided by a 15% increase in the refinance component and a near 7% increase in the purchase component. The MCI, an overall measure of mortgage applications, was 493.1, for the week ended July 3, up from 444.8 one week earlier; the results were adjusted for a shortened week due to Independence Day. On an unadjusted basis, the index decreased 0.5% compared with the previous week and increased 7.2% compared with the same week one year earlier. The refinance index, which had decreased by 30% for the week ended June 26, recovered about half of the loss, going to 1707.7 from 1482.2 the week before. The seasonally adjusted purchase index increased to 285.6 from 267.7 one week earlier. However, refis are still not the majority share of new applications, even though they did increase to 48.4% from 46.4% the previous week. The share of adjustable-rate mortgages applications increased to 4.4% from 4.3% for the previous week, the MBA said. The increase in refis came even though there was no downward movement in rates, as the average contract interest rate for 30-year fixed-rate mortgages remained at 5.34%, with points (including the origination fee) increasing to 1.13 from 1.12 for loans with 80% loan-to-value ratios, the association reported. The average contract interest rate for 15-year FRMs increased two basis points to 4.83%, while for one-year adjustable rate loans, it increased 6 BPs to 6.58%. The MBA can be found online at http://www.mortgagebankers.org.

Mortgage fraud-related Suspicious Activity Reports referred to law enforcement increased 36% to 63,713 during 2008, compared to 46,717 reports in 2007, according to the Federal Bureau of Investigation's 2008 Mortgage Fraud Report. While the total dollar loss attributed to mortgage fraud is unknown, financial institutions reported losses of at least $1.4 billion, an increase of 83.4% from 2007. The report showed that more than 3.1 million foreclosure filings were reported on approximately 2.3 million properties nationally during 2008, up 81% from 2007 and 225% from 2006. As of 2008, the Western region of the U.S. had the most pending FBI mortgage fraud-related investigations. According to the FBI's report, the top 10 mortgage fraud states for 2008 were California, Illinois, Texas, Georgia, Ohio, Colorado, Maryland, Florida, Missouri and New York. Rhode Island, Massachusetts, Pennsylvania and the District of Columbia were newly identified as having significant mortgage fraud problems.

Are you an originator who is constantly searching for a way to keep in touch with past clients and prospects in a way that will produce real results? You know how important it is and the chances that a prospect will do business with you decreases exponentially if you lose touch. Try this - I have been using this one method for years and it works: The newsletter.

Technology seems to have driven a wedge between people and their ability to interact. Face-to-face meetings and sales visits, once a staple of our profession, have been replaced by phone calls. The phone calls we used to make are now e-mails, and e-mails have evolved into text messages. It seems as we become more socially networked we are less "social" than ever before. A few days ago I conducted a workshop entitled "Relationship Selling" with 26 mortgage loan officers. Their year-to-date results ran the gamut from a couple of multi-million dollar originators to many in the group closing as few as two or three transactions a month. The sales manager invited me in to address their need for better month-to-month results and a push for purchase loan business. As a starting point, I wanted to test how well this group was "connected" to the business opportunities out there. After handing out four colored index cards to each participant (and swearing them to honesty) I asked them to answer four simple questions. Then I collected the cards and we talked about the results. Here's what we found: Question 1: How many face-to-face sales calls and visits have you made on Realtors, builders and other referral partners so far this week? Answers: Since the workshop was on a Friday morning, the group considered the previous four days. The average was zero. Yes, all 26 cards read "zero." Not one of the 26 had been out for a single sales call or client visit all week. Question 2: How many referral client appointments have you arranged for next week? Answers: Three cards said "two," four cards said "one," and the remainder said "zero." Question 3: In the past month, how many community or industry events have you attended? Answers: There were 10 cards which read "one" and 16 cards read "zero." Question 4: What percent of your loan applications are taken face-to-face with your borrowers? Answers: The high card was 90%; the low card was 20%. Some quick number crunching showed the group average right at 50%. The message of this exercise was clear; this group's results were suffering because they had lost the connection between human interaction and business opportunities. "Selling" to them was reading and typing emails and working on loan files. Instead of visiting Realtors, they were e-blasting mortgage market updates. Instead of meeting new borrowers, they were asking people to complete their own application online. Rather than going to a builder association function or community event, they were -- well -- I don't really know what they were doing. One thing was certain: If this group was to improve their production and their purchase loan numbers, they needed to get back on the streets and back in the game of interactive selling -- fast. There's no question that technology is an enabler; it allows us to do business in a faster and more precise way. Technology, however, has also proven to be a hindrance to some. More and more originators are spending more and more time in the office and away from the customers. Some have lost their edge, their presentation skills have grown weak, and their talent for interpersonal communication has rusted. They can text message 100 miles an hour, but they can't carry on an engaging five-minute conversation with another human being. And this isn't a "Gen X" or "Gen Y" problem either. This problem is getting worse with experienced, seasoned loan originators who have chosen not the best way to do business, but the easiest way to do business. An e-mail may be quicker than a phone call, but that doesn't mean it is more effective. Getting better connected doesn't mean throwing your cell phone or laptop or Blackberry in the trash can; it just means using your technology tools to support your sales efforts, not replace them. Alongside all this technology we have in the 21st Century, people are still doing business with other people. Referrals of good lenders are still passed along from friend to friend. Real estate agents continue to entrust their reputations and paychecks to lenders that they trust, like, respect and most importantly, lenders that they know. Borrowers come back to loan officers with whom they feel comfortable. The closer you get to people, the more effectively you can sell them that you are the right solution they are looking for. Yes, even today with all this technology, mortgage loan origination remains a people business. The best place to validate this claim is to look at our industry's top producers. They got to where they are, closing $50 million to $500 million a year, through strong and long relationships with people and by staying closely connected to their borrowers and referral partners. These superstars continue to thrive through good times and slow times as a result of their personal connections. They visit their clients. They meet their borrowers. They get up close and personal with their contacts. Just ask them. They'll tell you that people are the lifeblood of this business and that relationships are everything if you plan to be a success. The "people who know people who know people" have always prospered in this industry, and will continue to do so. Take time now to evaluate your sales efforts and your ability and willingness to stay connected to people. Ask yourself those same four questions I asked that group: Question 1: How many face-to-face sales calls and visits have you made on Realtors, builders and other referral partners so far this week? Question 2: How many referral client appointments have you arranged for next week? Question 3: In the past month, how many community or industry events have you attended? Question 4: What percent of your loan applications are taken face-to-face with your borrowers? If the answers are not what you want, now is the time to make some positive changes in your business strategy and in how you look at your job as a loan originator. Open up more connections and relationships and you'll open up more business opportunities, more contacts, more prospects, more referrals, and more loans.

Credit unions will partner with Maine's housing agency in a new program to aid first-time homebuyers with cash incentives of up to $5,500. When combined with federal tax credits, total incentives through the 'Gift of Green' program could be as much as $15,000. The Gift of Green offers: A grant of up to $5,000, not to exceed 4% of the loan amount, to help with the cash required for the downpayment and other closing expenses; and a coupon of up to $500 for a pre-weatherization and post weatherization home energy audit. Income and home price limits are listed at www.mainehousing.org, along with all participating lenders. Gift of Green loans will be made on a first-come, first-served basis while funds last.

Though the banking industry has a strong chance of defeating the Obama administration's call to eliminate the thrift charter, its arguments for defending it appear weaker than ever. According to a report in American Banker, two of the primary reasons for preserving the charter — stronger preemption powers and broader interstate branching rights — appear headed for the chopping block, and the third — a focus on mortgage lending — is now increasingly suspect. Many observers doubt the wisdom of keeping a charter that focuses primarily on real estate lending, arguing that thrifts caused the savings and loan crisis and helped fuel the current crisis. "Why do you need it?" said Chuck Muckenfuss, a partner at Gibson, Dunn & Crutcher LLP. "It has certain restrictions in it, and so why not just make it one better charter in which you can do whatever you want to do? That's pretty compelling."

Wintrust Mortgage Corp. originated $1.2 billion in mortgages in the first quarter and now it is expanding its correspondent channel by purchasing mortgages from members of Lenders One, a mortgage cooperative. The Lake Forest, Ill., mortgage company is a member of Lenders One and now it has become a "preferred investor" for the 125 coop members. "The transition to becoming a preferred investor of Lenders One brings opportunity for us to coordinate our efforts with the cooperative's sales team," said Valerie Moavero, WMC's vice president and correspondent lending manager. Wintrust Mortgage is a nationwide correspondent lender that offers FHA, VA and conventional loan products, including jumbo fixed-rated mortgages. Wintrust (formerly known as WestAmerica) originated $263 million in mortgages in the fourth quarter while it completed an acquisition of Professional Mortgage Partners, Downers Grove, Ill., in late December. PMP originated nearly $1.2 billion in loans in 2008.