Technology

Origination vendor Ellie Mae has acquired compliance provider Mavent for an undisclosed sum, National Mortgage News has learned. "In terms of what's going on in the industry, it was an opportunity that came along and fits strategically with what we think our clients need," Jonathan Corr, chief strategy officer at Ellie Mae told NMN. Employees from both companies will be merged. Mavent president Lou Pizante initially will stay to oversee the transition, but his future with the company is not decided, said Mr. Corr. "We're integrating the two organizations. Lou will work through the transition." Mavent analyzes electronic mortgage loan data to determine whether a mortgage transaction complies with over 330 federal and state consumer protection laws related to mortgage lending.

Automated underwriting and pricing engine provider PriceMyLoan and advisory firm Mortgage Capital Trading are introducing an interface that links their technologies and allows for pipeline hedging. The Automated Loan Pipeline Hedges and Analysis interface feeds loan pricing data from the former's AU and pricing engine into the latter's proprietary hedging model. The interface is designed to automatically update the hedging model when a lender locks in a rate.

Fannie Mae is raising its minimum credit score to 620 from 580 and lowering its maximum debt-to-income ratio to 45% to reduce future defaults. These underwriting changes go into effect the weekend of Dec. 12 as part of an update to Desktop Underwriter - Fannie's automated underwriting system. "The adjustments reflect careful analysis of a borrower's ability to repay their mortgage obligation over the life of the loan," said Fannie spokesman Brian Faith. Fannie claims that borrowers with credit scores below 620 are generally nine times more likely to become seriously delinquent than other borrowers. In modifying loans, "we have seen too many borrowers where their other consumer debt has jeopardized their success at homeownership," Mr. Faith said. He noted that none of these changes apply to Fannie's Refi Plus program, which provides a streamlined refinancing option for existing Fannie borrowers that have loan-to-value ratios greater than 80% and up to 125%.

Phoenix-based CCG Catalyst now offers contract negotiation services to financial institutions for vendors such as loan origination systems, servicing and online banking providers. As banks seek ways to cut costs, many are looking to contract negotiations with their existing vendors as a way to streamline operating expenses. In the case of contracts that were signed during prosperous times in the industry, institutions are looking at renewals in regards to their decreased budgets and investigating whether they are receiving enough value from their investment. CCG Catalyst has found significant savings for institutions that enter into early renewal talks with their vendors. The service also helps to assess if an organization has gone too far with concession requests so a vendor no longer views the business as profitable.

CredStar, a credit information provider for credit unions and the mortgage lenders, has been cleared to sell to its customer base the Encore report from First American Credco. Encore, CredStar said, is a consumer reporting solution that delivers Fair Credit Reporting Act-compliant risk analysis for critical elements of the mortgage application and servicing processes. CredStar is also part of the First American family. Encore gives users a "decisionable" view of the consumer and lending transaction, including applicant credit risk, identity verification, applicant income and employment verification, subject property and market data. Encore searches public, private and proprietary data sources covering 99% of the population, over 100 million active loans and more than 600 million consumer data records. A customizable rules-based analysis of the data is provided, along with recommended actions.

Experian, Costa Mesa, Calif., has created a suite of "ability to pay" products for use by mortgage lenders and brokers, among other credit grantors. Ability for a borrower to repay the mortgage loan is one of the hot button topics coming out of the mortgage crisis. The first product, Income Insight, provides an estimate of a borrower's individual income utilizing verified income data and proprietary credit bureau attributes. This product complies with the Fair Credit Reporting Act and the Equal Credit Opportunity Act, Experian said. The company targets customers while considering the complete financial picture, it improves risk-management efforts by including modeled debt-to-income ratios and it aims to accurately segment defaulted borrowers to maximize collection processes. Income View is a Web-based tax verification service that provides clients with what it said is reliable IRS 4506-T processing and prompt access to applicants' verified income via the Internal Revenue Service.

Equifax Inc. has acquired Rapid Reporting Verification Co., a privately held fraud detection firm, for $72.5 million in cash. The publicly traded Equifax said having Rapid Reporting in its stable will enhance its ability to provide lenders with "improved products, quality and services to help them better control fraud." RRVC is a specialist in IRS tax transcript information and social security number authentication services. Based in Fort Worth, Texas, Rapid Reporting products include IncomeChek, which provides IRS verification of income tax information, and DirectChek, which provides Social Security Administration verification of social security numbers and also meets USA Patriot Act compliance requirements.

Tree Inc., which operates the LendingTree.com website, saw its third quarter revenues fall 17% sequentially but was able to add a $75 million warehouse line of credit. The publicly traded mortgage bank/lead generator lost $7.4 million in the third quarter, compared to a slight profit in 2Q. In the year ago quarter it lost $22.6 million. According to its earnings statement, the company was hurt by what it called "unanticipated items" including $4.2 million in loan loss settlement requests and additional legal costs associated with a lawsuit. Even though the company lost money in the period, revenue at its lending operation — its largest segment by that measure — increased 21% from a year earlier, but fell 34% from the previous quarter to $24.1 million. The company said the decrease was primarily driven by higher interest rates, which led to a 31% drop in loan production, to $620.2 million. Its new warehouse lender is JPMorgan Chase & Co.

Technology provider Lender Processing Services, Inc. plans to give servicers more REO management options through its acquisition of the Chicago-based auction company, Rising Tide Auctions. The move will allow LPS, located in Jacksonville, Fla., to help servicers minimize REO timelines and reduce costs through its new component called LPS Auction Solutions. Buyers and investors will now have the ability to purchase individual or multiple bank-owned properties directly from the nation's leading REO disposition service provider. Servicers working with LPS Auction Solutions will benefit from the company's ability to manage all aspects of the auction process from beginning to end, including data collection, property due diligence, open house showings and the auction event, said Chad Neel, president of LPS Asset Management and Field Services. To help ensure timely REO dispositions, LPS utilizes a broker outreach program to encourage broker participation in the auction events. Web-based technology is used to communicate property details to potential buyers, enables the initiation of pre-emptive sales and allows simultaneous online bidding. Reporting functionality keeps servicers informed by providing access to sales metrics, auction day selling data and post-auction escrow information.

Wolters Kluwer Financial Services, Minneapolis has expanded its loss mitigation offering to include state and federal lending compliance consulting services that help servicers avoid discriminatory lending practices when modifying loans. Servicers can use it to ensure they meet all Home Affordable Modification Program fair lending guidelines recently issued by the Treasury Department, according to the company. WKFS said its compliance consultants are available to evaluate existing loan modification policies and procedures and help servicers address fair lending risks, review a sample of completed loan modifications the servicer has completed and denied, and conduct a statistical analysis of all completed modifications to identify modification criteria that might lead the servicer to violate fair lending laws. While modifying loans at risk of default as quickly as possible, servicers also need to make sure everyone is treated fairly and equally in the process, said WKFS senior consultant and statistician Don Morrow. Moreover, regulators are expected to "intensify their scrutiny of servicers' fair lending compliance," he said.