Mortgage technology

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.

First American Corp.'s proposed acquisition of the minority stake outstanding of First Advantage Corp. will simplify the legal and organizational structure of the two companies and aid in the proposed split of the former's financial services and information solutions businesses, according to a report from Fitch Ratings. Santa Ana, Calif.-based FAF, which already controls 74% of the equity in First Advantage, has made an offer to purchase the remaining 26% at $14.04 per share. In late morning trading on June 29, the Poway, Calif.-based provider of risk mitigation and business solutions was trading at $14.85 per share, after going above the $15 mark at one point. It was back in January 2008 that FAF first announced the split, similar to one already accomplished by rival Fidelity National Financial. However in July 2008, it put the split on hold, blaming market conditions. In a statement, Parker S. Kennedy, FAF chairman and chief executive indicated that the company was still committed to the split plan, saying "we believe this transaction will boost the financial strength of First American as we continue to prepare for the separation of our information solutions and financial services businesses." In its report, Fitch said the information solutions business has been a "shock absorber" for FAF during the real estate downturn, but took no ratings actions on the title company. It views the transaction as ratings neutral because it is an all-stock deal.

Irvine, Calif.-based Loan-Score Decisioning Systems has completed the necessary integration for lenders to connect to the Federal Housing Administration's TOTAL Scorecard platform directly from its automated underwriting system. Specifically, lenders that are using Loan-Score's product and pricing engine and AUS are able to able to instantly return decisions to loan officers or brokers electronically with this integration. In order to attain results from TOTAL Scorecard, lenders must use an AUS to connect to the system. Because Loan-Score is now an FHA integrated AUS, their clients' end users are able to hit TOTAL Scorecard for instant decisioning.

A Fitch Solutions/Portsmouth Financial Systems desktop application that offers loan-level analytics for the U.S. structured finance market will start with a focus on subprime, alternative-A and prime credit residential mortgage-backed securities. Michael Megliola, chief executive officer of Portsmouth Financial Systems, Portsmouth, N.H., said the application differs from others offered in the market because it offers "more granular structured finance analytics at the loan, bond and deal level." Users can define the parameters for the analytics in the application, which is called Deal View. These can include, for example, a comparison of prepayment and default rates for arbitrary loan pools, or interactive yield tables on a collection of loans, the companies said. They plan to add more asset classes to the application going forward.

The Federal Reserve Bank of New York has chosen commercial real estate information and technology provider Trepp LLC as collateral monitor for commercial mortgage-backed securities as part of the Term Asset-Backed Securities Lending Facility. TALF's monthly subscription window for new issue CMBS was set to open for the first time Tuesday afternoon. At press time midday Tuesday Trepp senior vice president Andy Liebman and Tom Sink said to their knowledge there was nothing pending for it, but they were already at work on aspects of the program that are being finalized, and said next month they anticipate the program will be underway for both new issue and legacy CMBS. Trepp said in its role as monitor it would assist the New York Fed in providing valuation, modeling, analytics and reporting as well as advise on matters involving newly issued and "legacy" CMBS in the program. The New York-based company said it would not establish policies or make decisions for the New York Fed, including decisions on whether to reject a CMBS as collateral for a TALF loan or exclude loans from mortgage pools. Trepp said it would use the analytics and forecasting services of its subcontractor and sister company, the Boston-based Property and Portfolio Research, in conjunction with its work as a TALF CMBS collateral monitor.

Southern California-based REOTrans has launched the RT Certified Agent Program, an online training regimen that educates agents in the REO-sales process. REOTrans has been providing basic training on the use of the workstation free of charge at various industry meetings, but the sessions were constantly overbooked, so the company decided to create an online series of courses. The company offers three levels of certification.

LendingSpace, the developer of web-based loan origination software for reverse and forward mortgages, has named Jeffrey Osheka president. Mr. Osheka has over 20 years in the industry working for companies such as Lydian, Decade Systems, Ultraprise/GHR and Fidelity Mortgage Funding. As president of LendingSpace, Mr. Osheka is responsible for directing the company's current growth, with an emphasis on the rapidly expanding reverse mortgage market.

Interthinx has integrated its fraud prevention system with MortgageDashboard's loan origination system. The integration enables MortgageDashboard to offer customers an interface with automatic screening for potential fraudulent activity, according to the Agoura Hills, Calif.-based company. BenchMark Mortgage was recently introduced to MortgageDashboard's expanded loan origination system.

Woodward Asset Capital LLC, Southfield, Mich. has launched OfferSubmission.com, a web-based software program geared toward firms that want to sell assets, including mortgages. Woodward is marketing the program to banks, servicers, GSEs, private equity firms and hedge funds.

Byte Software, Kirkland, Wash., has released the BytePro Loan Modification Edition, designed to help servicers process modifications under the Treasury Department's Home Affordable Modification Program. The BytePro Loan Modification Edition allows servicers to process HMP modifications from initial borrower contact through completion of the modification. The company says the software calculates the interest rate, term, and balance of the modified loan in accordance with Treasury mandates. For loans that do not qualify for the HMP program, the software provides the ability to modify loans according to the lender's own parameters.

Byte Software, Kirkland, Wash., has released the BytePro Loan Modification Edition, designed to help servicers process modifications under the Treasury's Home Affordable Modification Program (HMP). The BytePro Loan Modification Edition allows servicers to process HMP modifications from initial borrower contact through completion of the modification. It automatically calculates the interest rate, term, and balance of the modified loan in accordance with Treasury mandates, and it produces all the documents that must be executed by the borrower and servicer. For loans that do not qualify for the HMP program, the software provides the ability to modify loans according to the lender's own parameters.

Lend America, Melville, N.Y., has launched a new website for institutional investors looking to monetize their distressed residential mortgage portfolios. The company, a Ginnie Mae issuer, has been working to help institutional investors monetize portfolios by using the government's Hope for Homeowners program to handle loans that meet that program's expanding qualifications. The company has been one of the most aggressive in its use of the H4H program and recently said it was one of the first to complete to a "satisfactory" level the Department of Housing and Urban Development's pre-closing review period for direct endorsement of the H4H program. This allows it to underwrite, close and insure H4H deals without prior HUD review. The new website can be found at http://www.refiportfolio.com.

The Depository Trust & Clearing Corp. is recommending daily trade netting for to be announced mortgage-backed securities transactions. The DTCC said the move would cut what have been high costs in processing the trades and increase risk protection for the market. "The idea is to streamline the somewhat complex current `balance order' netting process," said Murray Pozmanter, DTCC's managing director, clearance and settlement/fixed income. "The industry's process today requires trading firms to allocate pools of mortgages against the TBA obligations we establish, and then to settle all those pools with multiple counterparties at different prices." He said the DTCC is recommending this be changed to a process where trades would be netted daily and the DTCC's Fixed Income Clearing Corp. subsidiary would "step in as the allocation and settlement counterparty." Currently, MBS trades are netted only once a month, beginning 72 hours prior to the monthly settlement date established for each kind of TMBA security. Because this forces trading firms to meet a netting cut-off on the "72 hour day," the number of trades incorporated in the current netting process can be limited, according to a DTCC report.

Compliance and risk management vendor ComplianceEase has launched HMDA Analyze and CRA Manager to enable mortgage lenders to manage the analysis and reporting that is required by the Home Mortgage Disclosure Act and the Community Reinvestment Act. The new offerings are hosted and Web-based HMDA and CRA solutions that therefore do not require in-house IT hardware maintenance and software updates. The new applications will enable the user to edit loan records, conduct dynamic analysis, and generate the Loan Application Register (LAR) and other reports for regulators from anywhere, and in real time given that both applications are completely Web based.

ServiceLink, a provider of origination and default services and the national mortgage services platform of Fidelity National Financial, has begun offering loan modification and refinance services for lenders and servicers offering loan products under the Homeowner Affordability and Stability Plan. Fidelity has integrated title data into the company's SmartConneXion title decision engine, providing immediate title decisions to clients at significantly reduced costs, said Jeff Coury, president and CEO of the Pittsburgh, Penn.-based ServiceLink. "Packaged with ServiceLink's Web-based closing solution, iClose and its e-signature feature, the unique product offerings maximize both cost and service efficiencies for customers conforming with recent GSE guidelines for such loans, including DU RefiPlus and Refi Plus Refinance programs." ServiceLink's technology, staffing models and customized processes allow each mortgage lender and servicer to integrate its loan fulfillment services with a customer's existing foreclosure prevention processes. The company offers a full suite of title and HVCC-compliant valuation products, signing services that include mail-away, electronic signing, mobile closings, and centralized disbursement and recordation services.

Fair Isaac — the company behind the most commonly used credit scoring system in the nation — has launched a new website that tells consumers if they qualify for a Fannie Mae or Freddie Mac loan modification under the Obama Administration's plan. The website asks the borrower 15 basic questions about their mortgage including the identity of their servicer. The GSEs launched similar initiatives a few weeks ago. The "Making Home Affordable" effort aims to modify or refinance up to 9 million GSE borrowers who are either underwater on their loans or have little in the way of refi options.

Automated compliance vendor Wolters Kluwer Financial Services notes that substantial regulatory changes have already been made, but lawmakers are in the process of debating additional legislation that would help protect consumers even more aggressively. Wolters Kluwer's compliance experts agree that development alone has already changed the mood within the financial services industry. "Regulators are feeling much more empowered than they were during the previous administration," said Edward Kramer, executive vice president for Regulatory Programs at Wolters Kluwer Financial Services. "More stringent regulatory exams, a rising number of enforcement actions and the growing number of financial institution closings during the first quarter of this year are evidence of that." Mr. Kramer said he believes the mortgage reform bill Congress debated last week could be the beginning of major financial services regulatory reform. The bill would fundamentally change the mortgage lending market, placing tighter restrictions on nonprime mortgage lending and lender compensation. Perhaps more importantly, it would require lenders establish what the bill calls a "duty of care" in proving borrowers could repay a loan or that refinancing gave them a net tangible benefit. "The proposed mortgage reform bill combined with numerous regulatory changes already scheduled to take effect this year could likely put financial institutions in a significant crunch," added Amy Downey, senior regulatory consultant at Wolters Kluwer Financial Services. "These changes are very different from those of previous years that required a simple update to a document or disclosure. Instead, they will require institutions to change the way they do business. Many institutions are just starting to figure this out and scrambling to adapt."

VantageScore, the credit scoring algorithm developed by the three major credit repositories, has been integrated in Standard & Poor's Rating Services' Levels 6.6 mortgage analytical model. Levels analyzes a loan, or a pool of loans, and assigns a risk grade; it also determines foreclosure frequency, loss severity and credit enhancements required for securitization. A spokesman for VantageScore Solutions, the Stamford, Conn.-based company that holds the intellectual property rights to the algorithm, said that with S&P's approval, mortgage loans that were scored using VantageScore can now be included in pools analyzed by Levels. S&P managing director David Goldstein said VantageScore would provide banks greater flexibility by allowing Levels to be used as a risk management tool to monitor their mortgage loan portfolio. Previously, Fitch Ratings incorporated VantageScore into ResiLogic 2.1, its quantitative model that provides credit risk analysis at the individual loan and pool level for residential mortgage loans.

Retreat Capital Management, Inc., a third-party arbitration services company in Lake Forest, Calif., is collaborating with Ellie Mae to make its mortgage loan modification services available to more than 120,000 mortgage professionals using the Encompass Mortgage Management Solution. Users may either directly upload borrower information through their Encompass systems, or fax the information to RCM. Retreat Capital uses an advanced rules-based loss mitigation technology platform that interfaces with the lender's servicing system. Once a mortgage is submitted, the technology matches that loan against all available loss mitigation options to determine the most suitable solution. At that point, one of the company's negotiation specialists contacts the borrower to present the available options. Once a resolution is reached, Retreat Capital handles all of the required paperwork and closing activities. "In this market, lenders are in dire need of loss mitigation and foreclosure prevention services, but unfortunately, there's such an influx of activity that they don't always have the time to develop a workable solution on their own," said Arvin Wijay, CEO of Retreat Capital Management.

To improve visibility into the hidden risk of many of the mortgage assets currently plaguing the financial system and capital markets, TransUnion has developed a new solution called TransUnion Consumer Risk Indicators. This solution, developed in cooperation with First American CoreLogic, a member of The First American Corporation family of companies, makes available previously missing information for mortgage secondary market risk analysis and modeling. The TransUnion Consumer Risk Indicators for RMBS (residential mortgage-backed securities) and whole loans bring current and historical loan-level consumer credit information to the mortgage industry for risk analysis. This includes hard-to-find information such as complete adjustable-rate mortgage exposure (beyond the loan in question) and the consumer's capacity to pay. This data is already proven to predict risk and consumer behavior for numerous lending products such as mortgages, auto loans and credit cards, but has previously been unavailable for mortgage-backed securities. The TransUnion Consumer Risk Indicators for RMBS incorporate proprietary matching algorithms jointly developed between First American CoreLogic and TransUnion. These algorithms link individual loans within non-agency mortgage-backed securities to the consumer credit information of the specific borrowers of those loans.