Friday, July 21, 2006

HUD: RESPA Compliance Aid for lenders

How's this for an idea, instead of spending millions on RESPA Cops trained to assume an aggressive posture and sniff out lender violations, why not open up a helpdesk and work with lenders who want to make things better by bending the rules? That's the new idea coming out of the Department of Housing and Urban Development (HUD), according to a recent story carried by BrokerUniverse newsletter.

I think it's a great idea, although a have a few reservations.

First, and the article didn't suggest that the agency was planning on diverting any funds already allocated to enforcement, you gotta have the RESPA Cops to deal with the people who think they're above the law. Secondly, you really need to have someone on staff that understands how to run such a program. Government hasn't presented any shining examples of its ability to create innovative new solutions that depart, in any degree, from the bipartisan regulations Congress manages to get squeezed out of our bicameral system.

Take the IRS, for example. Though years behind the trend, it is very nice to be able to get tax forms online, but if you have ever asked a question of this agency, you've heard the standard disclaimer. It appears that the IRS isn't qualified to give tax advice.

But HUD General Counsel Keith Gottfried hopes his agency will be able to not only offer useful advice, but also guarantee lenders that if they do bend the rules they won't suffer if the lender is "trying to make the homebuying process more transparent and less burdensome," according to the BrokerUniverse story.

Will it work? I'd rather see wholesale changes in RESPA than a system through which any lender can operate any way it wants as long as it seems to be trying to "do the right thing." I can see the workload in this department becoming unmanageable in short order. Remember how many comments HUD got last time it tried to change RESPA?

But it's still a bold plan. You gotta hand it to Gottfried for that.

Innovative Relevance: A new industry survey

Mark Dangelo, author of the Innovative Relevance series of books, has launched a new industry survey of real estate and financial services executives regarding Electronic Settlement, Security and Management (ESSM). You can find out more about this business, organizational and process research at the survey webpage.

Mark has written two books around the concept of Innovative Relevance, a more holistic view of Information Technology and general innovation in the enterprise. He has a gift for seing the larger picture, which has made him a successful CTO for a number of industry firms.

I expect his survey results to be very interesting.

Wednesday, July 12, 2006

CRC:Mortgage biz is broken

Today's BrokerUniverse newsletter carried the story of the Federal Reserve Board of Governors meeting to hear the concerns and grievances of community groups in California about predatory lending practices. Chief among the aggrieved was the California Reinvestment Coalition.
Kevin Stein, associate director of the California Reinvestment Coalition, said, "The mortgage market is broken, and we need the Federal Reserve to clamp down on predatory lending that unfairly targets people of color, the poor, seniors, immigrants, and their neighborhoods."

Yeah, right.

Remember, we're talking about a market that is, for the most part, a little strip of somewhat arable land sitting between the desert and the Pacific Ocean on one of the world's largest and most active fault systems. More than a quarter of its population was born in a foreign land and of the 13% the population grew between 1990 and 2000, nearly 70% immigrated from another country. They have no credit history and uncertain incomes. With the median price of a home in San Francisco (where the meeting was held) at $720,000 in the first quarter of 2006 (or as close to the top of the bubble as I can imagine it going) the CRC would like all of you mortgage lenders to quit focusing so much on risk and start lowering those mortgage interest rates.

Either that or admit that you're predatory lenders.

Or maybe we could just accept the fact that many of the citizens of California can't really afford to live there anymore and they need to relocate to an area where land isn't selling for such a premium and where lenders don't face the same high risk of falling property values.

What do I know? My mother's maiden name was Soto. We lived in Simi Valley, Calif. when I was born, just outside of Los Angeles. But not for long. The high cost of living, even back then, drove my parents out of the state when I was four years old. And we never looked back. I strongly recommend it as a course of action for anyone who feels like they're not getting a good enough deal on a million dollar, 3-bedroom ranch in Silicon Valley.

Tuesday, July 04, 2006

Commerce Velocity: speeding up origination

Encore Credit Corp., Irvine, Calif., has chosen Commerce Velocity, Irvine, Calif., to provide a mortgage origination software service. The new software will allow Encore to increase the percentage of applications it handles while funding loans more quickly. Commerce Velocity's software will focus on automation and the Internet, according to a story that ran in today's MBA Tech Newslink.

I recently spoke with Umesh Verma, CEO of Commerce Velocity about why his company is so focused on speeding up the process. His answer was that speed was a pre-requisite for mortgage industry success: speed to market with new products, speed following up on leads, speed in processing loans and ultimately speed at moving deals into the secondary market. The company provides technology to aid lenders at all points along that process.

The problem, he says, is that most technologies just speed up old processes. That's no longer sufficient in today's mortgage business. Furthermore, he asserts that mid-sized lenders need direct access to Wall Street liquidity that can be made possible through the proper application of technology.

Commerce Velocity technology is currently being used by Accredited Home Lenders, a national subprime lender that originated $3.6 billion in mortgage loans during the first quarter of this year.