Sunday, April 30, 2006

ALTA: Tech show under way

I'm off to Las Vegas for a couple of days, not to gamble, but to moderate a panel on the future business of local title agents at the upcoming American Land Title Association's technology show. With their business under scrutiny and consumer groups clamoring for more regulatory control, some may think betting that independent title agents can grow their businesses in the near future might be against the odds. I don't.

I'll be visiting with some technologists that believe their offerings could help agents grow their business, even in a hostile environment. We'll see. I'm hoping for a lot of audience participation and a lively session. If you're going to be in town for the show, be sure to drop by the session on growing your geographic footprint with technology.

Friday, April 28, 2006

Technology: The semantics of tech

Saw Anthony Garritano's column in the most recent Mortgage Technology newsletter, where he writes of the differences between end-to-end and best-of-breed, two of my favorite buzz terms (they rank up there with SOA-enabled and MISMO-compliant).

Tony did a survey recently that revealed that 31% of the industry believes that the future technology will be built around end-to-end systems, while 69% think it will revolve around best-of-breed.

Now, Dorado is talking about the end-to-end experience. Think of it as a mixture of the best of both. It's an end-to-end system built of best-of-breed components. Nice. These are the guys that came up with demand-chain management. Master marketing guys. They also have some big companies using their software, which says more than any pithy positioning statement. But I still think they're muddying up the water here a bit.

Think about it. Who produces the best automobiles in the world? I can hear a bunch of different answers out there, but they are all automobile manufacturers. Not a single chemical manufacturer or oil company makes the list, does it? People who make the best products tend to specialize in making those products, which is why we call them specialists and seek them out.

In our industry we have some top technologists creating LOSs, AUs, Document management systems, business rules management systems. We see a bit of overlap, but there has never been a single firm that has been called a specialist in the production of technology for the entire, end-to-end process of delivering a mortgage. And you're unlikely to see one.

That's why the best minds in the industry are working with MISMO to establish data standards to allow seamless sharing of data between the various components that will become parts of the various end-to-end loan making "experiences" that will be created by lenders in the industry. Is there great software out there that can manage the loan making process from end-to-end? Yes. Dorado is proud of it's software. And so is Mortgage Cadence, Dexma, Vuecentric, Del Mar Database, and others.

Forget about end-to-end, except to think of it as the simple process of taking a prospect through the process to closed loan like you have always done. Seek out best of breed components and make sure you have a MISMO-compliant, SOA-enabled core operating system that can pull them together without any evident seams. And go back to work.

Monday, April 24, 2006

ACORN: Tell us what brokers earn

Consumer groups are not going to let HUD off the hook easily, according to a story by Brian Collins in last week's National Mortgage News.

"Consumer groups are reminding the Department of Housing and Urban Development that RESPA reform also means regulating mortgage broker compensation so consumers know up front how much they are paying the broker in a loan transaction."
Really? I'm not suggesting Brian got the story wrong. I've never known him to do that. But, I didn't know that the Real Estate Settlement Procedures Act was about regulating what the professionals involved in the transaction earned. In fact, I'm sure it's not, but I can see why these radical groups would like current HUD leadership to think that it was.

YSPs are not kickbacks, unless you assume that it's just as easy to write a plain-vanilla conforming loan as it is to write a subprime loan. My understanding is that RESPA demands that you earn your fees. Non-conforming lenders do that.

Now, should consumers know how much they're paying for a loan? Sure. TILA requires it. Should they have the information to compare different loan programs from different lenders or brokers? Sure. The HUD-1 is supposed to provide it, which is why RESPA reform is important. Does that mean that RESPA (or any law) should regulate what brokers earn? Only a person paid to peddle influence would even suggest it.

Speaking of which: I went to ACORN's website to find out what its executives earn. I couldn't find any information on the site. Interesting. It's probably there, though. Anyone who cares so much about disclosing what people earn would surely be taking their own medicine. Right?

Feel free to tell me if you think I'm off base. E-mail me if you want your comments posted to this blog.

Monday, April 17, 2006

ABC: The basics of winning broker business

Spoke to Don Henig this morning. He's the president of American Brokers Conduit (ABC), a unit of American Home Mortgage. His executive vice president Lisa Schreiber joined us on the call. She oversees much of the broker-centric work ABC does to recruit and serve third-party originators.

Like most wholesale lenders, ABC understands that its business depends, now more than ever, on the strength of it's origination partners. Unlike most of the lenders I've spoken to recently, Henig and his team think they can do something to make the brokers that work with them more successful.

Most wholesalers will tell you that if their brokers are successful they will be more successful, but, at the end of the day, they're really looking for motivated self-starters who will take the company message to the ends of the earth for a little piece of the pie. ABC seems to be taking a different approach.

Take the company's Advisor Center for example. Free live seminars, featuring some of the top speakers in the industry, online training and marketing material and a planned online networking center are some of the tools ABC uses to enable brokers to do more in a slower market.

"Many of the brokers in the business have only been in for about five years," Henig says. "They haven't been through the cycle yet. So we have to help them grow their business throughout the cycle. That's why we started the Advisor series."

Last year, ABC trained between 6,000 and 7,000 brokers, Henig says. This year, closer to 10,000 will participate in the live programs. He admits that brokers tend to rush back to their offices, fired up by the presentations, and send business to ABC, but they are leaving with more than just another place to sell their loans.

"You may go to a seminar and get 36 great, new ideas. My advice to brokers is that they implement just one. If you take away and implement just one new idea, you'll be ahead of the pack," Henig said. "When that one works, you can pick another new idea and implement it."

In addition to training, Schreiber says ABC is working hard to put better technology in broker hands. Product Advisor helps brokers choose the right loan product for borrowers, and then provides pricing. A customized Fannie Mae Desktop Underwriter tool allows brokers to use the familiar interface even when they are submitting loans that don't meet Fannie's guidelines. For similar reasons, ABC is a Point lender, making it easy for many brokers to access its products.

Finally, ABC has turned about 115 of its underwriters into Broker Relationship Managers (BRMs). Henig describes them as underwriters on steroids and says they become a second (often first) line of communication with brokers in the field as they work together to get deals closed.

During this part of the cycle, every wholesale lender is focusing more on the brokers. Only a few will focus on the broker's business. They'll be the ones that win.

Thursday, April 13, 2006

MortgageMediaMag: Making waves at shows

If you haven't been over to MortgageMediaMag, you should check it out. Bill Draving and Rob Hain have been doing a great job of getting some top industry folks to open up for their audio and video programming.

They gathered a lot of good content at the recent Mortgage Bankers Association Technology in Mortgage Banking show in San Diego. You'll find it on their site.

Executives, even in banking and real estate, are starting to figure out that these new tools have the potential to make it easier to get their stories across. If you're a fan of the podcasts that hit, you should also bookmark MortgageMediaMag.

Friday, April 07, 2006

Prymak: A new way to buy technology

If you ask Peter Fugaro, managing director at Prymak, why mortgage loan originators change swap out their LOSs every 5 years, he'll tell you it's because they bought the last one the wrong way. He's got it all graphed out.

There are 9 or 10 critical steps in the LOS buying process. Almost every originator goes through the same steps every time they switch platforms. Fugaro, who led the buyout of the Prymak LOS from FiTech back in 2000, says that while you need all these steps, lenders are doing them in the wrong order.

"Lenders have a process for procuring this software," Fugaro said, "but it's not very analytical. Too much reliance is placed on the 'dog and pony show.' The biggest problem is they're doing it in the wrong order."

To help lenders overcome this problem, Prymak offers its Discovery 180 offering, a systematized approach to LOS selection that puts more emphasis on developing a good RFP and less on being wowed by a canned demo.

But why would a lender pay an LOS vendor to tell them what LOS to buy?

"We don't actually make the recommendation," Fugaro said. Once the lender goes through the process, the right answer becomes clear. Howard Hanna Mortgage Services bought this product in March.

And if it happens to be Prymak's LOS that Discovery 180 points to, so much the better for Fugaro and his team. But if it doesn't, he has another offering.

Deployment 270 is designed to help lenders make their way further around the cycle of new LOS implementation by actually helping the lenders implement it. But why would an LOS vendor let a competitor help their new client implement their competing system?

Fugaro says that Prymak is the perfect partner. Unlike some other consultants that help lenders with these initiatives, Prymak says its team has many years of actual mortgage lending experience. Add that to the fact that they also design and deploy these systems and you have a partner that can highlight the pitfalls before you get into trouble.

"We don't actually look at the competitor's code," Fugaro said. "We just help the lender the plug ugly underbelly stuff like setting up the doc print groups and managing priviledges."

Will anyone buy this? TBI Mortgage, a subsidiary of Toll Brothers, a national builder, bought the product last month.

But Prymak hopes, even if its managing director tries not to say it out loud, that more lenders will choose the company's Evolution 360 loan origination solution. Fugaro says lenders will have to make their way around the circle before they get there, though.

"We used to be like everyone else," he said. "We've changed the sales model. We don't even take RFPs anymore. "

For more information about Prymak, see the company's website at

Seroka: Helping to promote banks

I sat down with John Seroka, vice president of Seroka & Associates, a public relations and marketing firm based in Waukesha, Wisc., while I was attending the MBA's technology conference in San Diego last week. I was impressed.

He's young and perhaps a bit too hip to hang with bankers (but then he's based in L.A.), but he certainly understood their problems in a down market.

"Rates are up and their probably not coming back down anytime soon," he said. "It's just that part of the cycle. But we at Seroka have some recommendations for banks, from the marketing perspective."

Seroka said that mortgage lenders face a quandry every time the market dips. It doesn't seem to make sense to spend money on marketing and promotion when you have so much less revenue coming in. And you didn't need to spend that much to promote when business was waltzing through your doors. He calls it a Catch-22 that could force some companies out of business if they don't take action now.

"The key to longevity lies in building a brand," Seroka said. "You have to go beyond just advertising in the newspaper and sending out direct mail. You need PR."

He says this is even more important right now for mortgage brokers, especially those that were too busy shopping for new sports cars during the last refi boom to develop their brand equity.

Two ideas Seroka was talking about at MBA Tech were the company's ePersona offering and its Tarketed TV media buying.

ePersona is a website tool that involves the company's spokesperson walking right into the website to speak directly to web site visitors, with no download time. Seroka says the tool will allow prospects to connect with a website as human beings in the way that only a human can.

Target TV is an approach that helps companies get more milage out of television advertising through media search and optimization strategies.

"The market is collapsing," Seroka said. "The only way a lender can grow is by getting more market share. That can be accomplishing by putting together a good plan with a good message that will stimulate people to do business with you."

Find out more by contacting John Seroka at or by visiting the company's website at

Thursday, April 06, 2006

String:Seeking a partner for appraisal outsourcing

Originators love Automated Valuation Models (AVMs). They have evolved into affordable tools that quickly return a realistic value for many properties around the country. Some offerings include insurance, guaranteeing the lender that the AVM provider will protect them in the event their valuation is incorrect. Others include forecasting tools that project the value of the collateral out into the future.

But as cool as these tools are, they don't work for every property, so lenders fall back on traditional appraisals. Regardless of how the originator gets a value on a property, the firm will want to have a compliance team check it out on the back end. That's been a pain point for lenders in the past. They don't want to let too many loans flow through without an appraisal review, but each time they do it they spend more money to close the deal.

Prashant Kothari wants to change all that. He's the president and founder of String Outsourcing Solutions and he's working with collateral valuation specialist and consultant Vicky Cassens to locate lenders who are finding it difficult to effectively perform adequate appraisal review.

"About 15% of the outstanding loans in the U.S. are collateralized by properties that have been over valued," Kothari said. "We can make it affordable for lenders to avoid predatory appraisals."

Interested? Contact Kothari at or check out the company website at