Wednesday, April 30, 2008

MRG forms alliance with Lydian for outsourcing

As the business continues to shift, what have been viewed as traditional mortgage lenders (brokers working for wholesale lenders selling product directly to Wall Street) have given way to what we used to call traditional mortgage lenders back before the S&L crisis. Community banks, savings & loans and credit unions are now finding more home loan prospects asking for service. These borrowers don't have all that many other options in the market today.

Because these new lenders haven't built their operations around the home loan product, many are finding it expedient to outsource some or all of the lending function to third party origination firms that take the application, process the loan and close it in the institution's name.

Dexma has been working in this area for many years under its PrimeAlliance brand. Recently, more companies are getting into this business.

While few companies exist that can take the loan transaction from end-to-end, alliances are making it possible for those firms that specialize in various parts of the deal to come together and form good solutions. A case in point is the recent alliance between MRG Document Technologies, Dallas, and Boca Raton, Fla.-based Lydian Data Services.

According to the companies, their new alliance will provide an end-to-end outsourced mortgage lending solution to any institution that hires them. Specifically, the alliance enables MRG to extend its Miracle document preparation system to customers of Lydian's origination fulfillment center who use Lydian's outsource capabilities to supplement or replace their own internal processes.

Through a new interface, Miracle upfront and interim disclosures as well as closing documentation are available directly from the Lydian Exchange Network, an offering that unites lenders and industry service providers.

We can expect to see more alliances like this in the future, primarily between companies that have been working together on deals for some time. The only difference now is that there is no monoline mortgage banking firm in the middle pulling all of the pieces together. The vendors will have to find ways to come together on their own to provide a more complete solution for institutions that don't have as much experience in the business but that now find themselves with business aplenty.

Tuesday, April 29, 2008

eLynx Processes over 2 Billion Electronic Docs

eLynx, a portfolio company of American Capital Strategies Ltd. (NASDAQ: ACAS), says its document communications network will have processed, distributed and facilitated collaboration on a total of more than two billion pages of financial services documents by the end of business today. Anyone interested in watching the doc-ometer roll over can surf to the company's website at www.elynx.com.

eLynx provides the most widely used secure electronic document communications network for the financial services industry. The company bought Swiftview in 2006.

eLynx reports that in 2007 alone, more than 12 million secure financial transactions – involving lenders, insurance carriers, agents and consumers – were electronically completed via eLynx document processing services. The firm is already seeing increased activity due to lenders' renewed commitment to electronic mortgage lending.

eLynx remains committed to providing financial services enterprises with the very best in secure electronic document technology and services,” says Sharon Matthews, eLynx president and CEO. “But our commitment goes beyond that. We're making sure we're working as hard as we can to deliver real world financial performance while making a positive environmental impact. With over two billion secure, paperless documents processed – that's a stack of paper nearly eighty miles high – I think it's safe to say we have a sustainable model for removing paper from our customers’ operations.”

Disclaimer: I was hired to facilitate the company's IdeaWorks Users Conference in February and spent a couple of days with eLynx executives and executives from its Top-10 US banking clients. I was impressed with the company's vision and with the willingness of its top clients to embrace it. When eMortgage's take off this year, this will be one of the companies in the lead.

Wednesday, April 23, 2008

RealtyTrac: Selling data to RE/MAX

A new consumer foreclosure property search feature has been added to thousands of RE/MAX websites thanks to a new strategic partnership with RealtyTrac. The sites will feature foreclosed properties in Northern Illinois, New Jersey, Kansas, Missouri, Oklahoma, Arkansas, Alabama, Louisiana, Mississippi and Michigan.

Reliance Network, a developer of Web-based applications for real estate companies, is reportedly handling the technology.

RE/MAX is hoping that its agents will be able to capitalize on potentially hundreds of thousands of foreclosures by offering up the properties alongside the company's traditional MLS listings. The company says this will provide a "true 360-degree view of the market."

Moving foreclosed properties, or Real Estate Owned (REO), will be big business over the next few years.

Tuesday, April 22, 2008

iEmergent: mortgage market forecasts

In an effort to enhance lenders’ marketing efforts, Des Moines-based iEmergent, a market research, forecasting and advisory services firm for the financial services, mortgage and real estate industries, has introduced its suite of Market Manager reports. iEmergent's primary product lines are derived from unique market metrics that calculate where and what types of lending opportunities exist, enabling lenders and brokers to anticipate and forecast mortgage opportunity.

Founder and president Dennis Hedlund says his company’s reports are based on years of advisory work his company has done for major lenders and mortgage data going back into the early 90s. He says that lenders need more information about the markets they hope to compete in and historical analysis will not suffice.

“These are exceptional times,” Hedlund said. “[Markets like] Seattle or Columbus get a terrible rap for low growth and lack of opportunity, but within all of these markets there are opportunities. Lenders need to look underneath their markets. The opportunities are like diamonds everywhere, but it’s not like 2004, when you put out a shingle and someone called you for a refinance.”

Unfortunately, Hedlund says that most lenders are still thinking about the transaction, tactically instead of strategically. During the refi boom, lenders were forced to seek out efficiency. They opened offices where their businesses took them. Now, they are faced with a different environment and must make informed decisions as to how to grow their businesses.

“Many of the institutions I’ve worked with in the past haven’t utilized this level of forecasting, which goes down to the community level,” he said. “They felt that all you needed to know was what happened last year. The problem is that even if you know what happened in the last 3 years it won’t really help you much this year.”

In response to that iEmergent is making available a number of market analysis reports that provide mortgage lending forecasts, market comparisons and measurements. With the reports, financial institutions can identify and quantify the current potential lending opportunities in markets throughout the United States, the growth rates of mortgage lending in the future and how those opportunities are changing in individual markets.

Where is the opportunity in today’s market? Hedlund had some tips: Look to Dallas, Kansas City, Washington D.C. and Chicago.

PMI: Teaching from the Web

PMI Mortgage Insurance Co., a subsidiary of the PMI Group Inc. (NYSE:PMI) , has launched its PMI Training Bootcamp, an online training website for customers to better leverage the Web as a training tool. The site is expected to significantly extend the reach and resources of PMI's training department.

According to the company, PMI can now provide customers with educational information about PMI's products and services, without increasing headcount or incurring the operational costs of trainer fees and travel. Now, the majority of the company's training modules will be delivered online via both webinar and on-demand.

PMI offers residential mortgage insurance and credit enhancement products, financial guaranty insurance, and financial guaranty reinsurance. The products are sold to borrowers by the lender, making it important that loan officers are properly trained to explain the benefits of the products.

"Our industry has changed dramatically in the last year, whether it's changes in GSE loan limits, old customers leaving the market, or new customers being introduced to PMI for the first time," said Jesse Rivera, vice president of marketing for PMI Mortgage Insurance Co. "PMI Training Bootcamp is a fast, efficient way to maintain our existing staffing levels, while continuing to expand training opportunities and grow our customer base."

Friday, April 18, 2008

Neustro Banco: seeking Hispanic banking customers

Nuestro Banco, a new bank set up specifically to serve the growing Hispanic population in North Carolina, has chosen Information Technology, Inc., a unit of Fiserv, to provide its core banking system.

Last year, I wrote about this emerging market for Mortgage Banking magazine. Writing the piece, I learned that this market will grow to comprise 20 percent of our nation in just a few years. I also learned that this population has little respect for traditional US financial services brands. Consequently a number of new banks are rising up in the hopes of serving this market under Spanish language brands. While Nuestro Banco (Our Bank) may not be the most creative name, it could work to attract these consumers if it keeps their needs in mind. With the Hispanic population growing rapidly in the state, it is a good opportunity.

A release issued by the two companies indicated that the bank would use ITI's Premier software suite, which offers highly scalable products for virtually every function, including core accounting, branch and Internet banking, business intelligence, risk and compliance, remote capture and transaction management, enterprise business process and content management.

“The Hispanic population is growing at 20 percent per year in North Carolina,” said David Flores, president and chief executive officer of Nuestro Banco, “and the group’s purchasing power is actually growing faster than the population growth rate. The Census Bureau estimates that by 2050, one fourth of the nation’s population will be of Hispanic origin, yet today, the Latino populace as a whole is severely underbanked.”

Flores said the key to capturing this business will be to design new ways to bank – ways that accommodate the Hispanic culture, habits and way of thinking. "We understand these factors, and so does Fiserv," he said.

Unfortunately, a key aspect of Hispanic culture is that they don't typically use banks. Nuestro Banco apparently hopes to change that by working with "a software partner who not only understood the dynamics of the Hispanic banking market as it stands today, but one who could see the long-term direction the financial industry will take in response to its expansion."

Fiserv ITI will leverage its Spanish-language Internet and telephone banking software for its new client, as well as its popular Hispanic Banking Toolkit, a tool that the company claims provides insight into cultural differences and common barriers to banking for Hispanics.

I've written a lot about Fiserv over the years and I think highly of their engineering staff. Their software is widely used, both in banking and mortgage. But the key to serving the Hispanic population probably has little to do with innovative new banking products. They view banking services pretty much the same way the rest of us do, as commodities.

They key will be in creating a community that builds trust among members of a market that have traditionally been cheated at worst and ignored at best. The tools exist to do this and I personally believe that it is likely to be a bank serving a niche that first makes good use of them. It could be Neustro Banco, in which case they'll be happy they have a good core processing system to handle all the new business.

MRG: compliance related updates

MRG Document Technologies, Dallas, has enhanced its Miracle Online doc prep system with an eye toward compliance. The company has updated the software to meet specific regulations for a couple of states.

In California, MRG now provides a completed document to satisfy the California Department of Corporations' requirement to supply a Nontraditional Lending Disclosure when a loan is considered a nontraditional product. When the property is located in California and the selected product is either an interest-only or option/negative amortization adjusted rate mortgage, a new screen titled “CA additional programs" is available for users to select up to ten additional loan programs offered by the lender.

Additional programs are used to calculate values that populate the disclosure included in the document package. MRG's system calculates results using the lender's products and terms as specified in MIRACLE and as required by the regulation. The document is not static and does not include predetermined products and calculations.

In Maine, MIRACLE now includes a screen for completion of the Maine Reasonable, Net Tangible Benefit Disclosure. For refinance transactions in Maine, lenders can complete the disclosure on the “related lien” screen.

“As states announce new lending regulations to reflect current market conditions, MRG’s systems continue to evolve,” said Terry King, group Chairman of MRG. “MRG understands that mortgage brokers and lenders require customizable tools that fit their current loan products and comply with state requirements and borrowers' needs, and we provide a flexible system to meet those requirements.”

Most mid-tier lenders have fallen back on the document vendors to provide built-in compliance services, though many competitors don't have internal compliance attorneys on staff. This is an area of high concern for lenders in an environment of increased scrutiny, overlapping jurisdictions and additional legal complexity. (I could have just said "scariest environment possible" I guess).

MRG is the mortgage document practice group within Middleberg Riddle & Gianna, a mortgage regulatory law firm.

Wednesday, April 16, 2008

Kaleidico : Sales management and Twitter

Bill Rice and his team at Kaleidico have launched a new tool that provides sales lead management through Twitter. He calls the new tool Sales-Twit and explains it on his blog.

I've been trying to use Twitter for a month or so now (after abandoning it once already), but I haven't taken it to the mobile phone. I use Utterz for posting from the smart phone.

What Kaleidico is doing takes this tool to a new level. If it is successful, it might be a better way for many field-based salespeople (real estate agents, insurance agents, etc.) to manage their lead pipelines. I plan on learning more about the tool and will report back.

Wednesday, April 09, 2008

TAVMA conference first day a success

Like all industry shows this spring, attendance was down somewhat from last year at the Title/Appraisal Vendor Management Association's annual convention here in Orlando. But that didn't keep the organization from putting on a great show the first day.

The session speakers were very good and I've heard numerous comments from attendees indicating that they are taking away real value. Example, Monte Jiran, COO of Equity Settlement Services, a title company, told the audience at the technology panel that it's not about what software you choose or what vendors supply it, it's about how the partners you choose to work with work with each other. If they are not willing to "play nice" together for the benefit of his business, he ditches them. That's a contrast from what we often hear on the origination side of the business, where companies keep looking for an end-to-end solution provided by a single vendor. Lenders still seem to be pretending that they want that kind of a one-to-one relationship, but when vendors offer it, they don't buy it.

The title agents and appraisers who come to this show to meet with some of the nation's largest vendor management firms don't have large technology budgets. They need a lot of support and count on a number of vendors to provide them with a quilt of inter-woven solutions. Jiran told attendees to demand that vendor partners come together on every aspect of the platform to make sure that all works.

We also heard from Jeff Thredgold, economic futurist and publisher of the weekly Tea Leaf, as well as leading appraisers who addressed the many changes coming to that side of the business.

I'm down to the floor now to hear attorney Phil Schulman give his keynote. He's always informative and entertaining.

Friday, April 04, 2008

FIS embeds appraisals into LOS

FIS Valuation Solutions, a Fidelity National Information Services Company, announced today that it would embed its services as a free module into The Mortgage Office, the leading loan servicing software solution from Applied Business Software. Users of ABS' Loan Servicing module will now have seamless access to FIS property valuation reports, including the ValueSure AVM and Preview, an automated review tool to assist clients in determining the quality and loss potential of real estate collateral without the need for a complete appraisal review.

The recent Home Value Code of Conduct, release by OFHEO in the wake of the GSE meetings with New York's Attorney General, have much of the industry in an uproar right now in regards to the appropriate controls for ordering and managing property valuation products. The Code, if implemented as written and planned on Jan. 1, 2009, will create massive change int he way lenders order appraisals. It will undo much of the work that has been done over the past 20 years by lenders to streamline this part of the business through captive joint venture entities.

Property valuations for loss mitigation purposes are left largely out of the new Code, which makes it a good time for companies like FIS to solidify agreements with loan servicing software providers like ABS.

Thursday, April 03, 2008

Radian: launches program to stall foreclosures

Radian Guaranty, Philadelphia, has launched a new program, called Radian FastAdvance, designed to provides quick, partial claims advances that allow residential mortgage servicers to assist distressed borrowers by modifying the terms of a loan (such as a rate reduction) or by structuring a customized repayment plan. The company also announced a partnership with Consumer Credit Counseling Service of Delaware Valley (CCCS) that will provide education, customized assistance, and a method of direct communication between borrowers and servicers using the Radian FastAdvance program.

Mortgage insurance companies have been hard hit during this downturn and losses will mount if companies can't find ways to keep mortgage borrowers from walking away from their properties. Radian says there is no single solution that will help every borrower and so the company is advancing funds to servicers so they can take the specific action required to keep borrowers in their homes rather than proceeding with a stressful and costly foreclosure process.

The partnership with Consumer Credit Counseling Service of Delaware Valley will provide borrowers access to third-parties that can assist them in sorting through all of their options.

"The combination of the Radian FastAdvance program and the partnership with the CCCS is a sign of progress in helping borrowers and servicers navigate what has been a very difficult market environment," said Paul Fischer, Radian Guaranty's Executive Vice President of Loss Management. "Having such a respected, independent counseling organization available will give individual borrowers the confidence to work through their situation."

Radian says servicers are already making use of the new program.

Zillow: Free leads for lenders, but some risk

Zillow has now launched its mortgage offering, which is more of a social network for borrowers in search of a loan than anything else. The company will allow lenders who pay it a $25 fee to provide free information to lenders interested in a loan, subject to certain rules.

The news is getting plenty of play around the blogosphere. I don't want to go over the same ground, but a couple things spring to mind that should be considered by any lender that chooses to work with Zillow.

First, Zillow reserves the right to work with an unnamed third party to perform due diligence on a lender before allowing admission to the network. Part of this work will involve "checking standard sources for complaints or comments." Not sure what these sources are, but should something bad come up (say the lender was sued by ACORN or something), then instead of gaining access to free leads, the lender could be saddled with the stigma of "banned from Zillow!"

Secondly, in order to get access to borrowers, the lender must create a public profile and accept any and all comments from the community. Most lenders don't have community managers for their own Internet lead generation efforts, but now any lender that works with Zillow will basically be opening up a big storefront where anyone who wants to bash them can do so publicly. Who will respond to this on the part of the lender?

Finally, Zillow will advance a code of conduct that all lenders will live by, requiring them "to be
accurate, professional and law-abiding in all interactions." Lenders are already required to be law-abiding. I'm not sure if they need another "regulator" to ensure that they are accurate and professional. And what if Zillow, responding to public feedback, determines that a lender isn't living up to the code. What if, say, a lender doesn't offer subprime loans in a certain urban area where borrowers really need loans? Is that grounds for banishment? Some members of Zillow's public may think so.

Zillow has done an amazing job of creating value online in an area in which others have failed. This move may be taking their offering a bit too far. Unless they just get ungodly traffic, in which case all bets are off and they can make their own rules.

PCLender invests in SAS 70 audit

Despite the downturn in the market, mortgage technology vendor PCLender.com reports that it has completed a service auditor’s review, commonly known as a SAS 70 Type II audit, of its InHouse Mortgage (IHM) and PCApproved applications.

The company provides a fully hosted web based software and services solution to mid-sized mortgage bankers and financial institutions.

The audit was performed by SAS 70 Solutions, a nationally recognized independent auditing firm, and was completed in January, 2008. Included in the scope of the audit were PCLender.com, Inc.’s customer service control activities, as well as the general controls that support these activities.

SAS 70 is an acronym for the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standard (SAS) No. 70, titled “Reports on the Processing of Transactions by Service Organizations.” SAS No. 70 defines the professional standards used by a service auditor to assess the internal controls of a service organization and issue a service auditor’s report.

“PCLender.com management understands the ever increasing importance of corporate governance, as well as the impact of our services on our clients’ system of internal controls,” said PCLender.com founder and president Lionel Urban. “The successful completion of the 2008 SAS 70 Type II audit is only part of PCLender.com’s continued commitment to maintaining a high level of internal control. PCLender.com, Inc. has engaged its service auditor to a long-term contract whereby PCLender.com, Inc. will undergo a Type II audit on an annual basis.”

It's good to see vendors doing what's necessary to keep their offerings viable, even when times are challenging.

Another insurance company buys into lending

Technology adoption has always posed a struggle for companies on the cutting edge. I've spoken to so many CTOs who have told me they see a vision leading to a better company or customer experience, but just can't get the cats all marching in the same direction.

HousingWire carried a story today about MetLife, Inc. and its plan to buy EverBank Reverse Mortgage LLC of Bloomfield, NJ, in the hopes of rapidly growing its reverse mortgage lending business. If this is just another story of a rich insurance company buying into a niche lending operation when the market makes the deal attractive, then it makes a lot of sense to me. The company could easily staff up the reverse lender with some of the many mortgage pros that are now available for work and the plan should work out fine. But if they hope to get their insurance agents to add the product to their existing menu, it probably won't work.

I was on the phone last week with a vendor who was lamenting the fact that it had sold hundreds of seats of its loan origination software to a bank owned by an insurance company that hoped to deploy the LOS to its insurance agents. The plan was that they would add simple mortgages, probably HELOCs, to their menu of products and originate like crazy. It didn't happen and now the vendor is worried that the contract won't be renewed due to lack of adoption.

This morning I was talking with another vendor who had sold an excellent document-related technology to a major property and casualty underwriter but then couldn't get the insurance company to deploy the software through to its agent offices. Adoption is a huge problem in the insurance space.

Getting successful insurance agents to focus on a promising new technology in the hope of possible commissions at the expense of focusing on existing products that are already generating commissions is pretty much a waste of time. My brother is an agent. I have logged hundreds of hours listening to him tell me how much he could make if he sold this combination of products to this market or that combination to that other market. He, like the insurance companies he generates policies for, knows exactly how much he will make for exactly how long (at least until the companies change their rules) for every product in his briefcase. He spends his time where he can make the most money.

Metlife may do fine, as it already owns a bank and may just inlcude Everbank's reverse mortgages as a new origination channel. But if the company is hoping to turn the nation's insurance agents into mortgage originators, they'll probably need a bigger plan.

Wednesday, April 02, 2008

Calling All Vendors: Government needs your help

As loan volumes continue to fall, more technology vendors are working to extend their functionality to other markets. Now, the US government's Small Business Administration is offering up an opportunity.

The U.S. Small Business Administration is looking for innovative ideas from the lending and business communities on ways to leverage its Web presence to establish a new e-commerce portal to help expand credit availability for businesses and give lenders increased access to new potential small business customers.

SBA's site logs approximately 1.9 million visitors per month. With that goal in mind, the SBA has issued a Request for Information, RFI, from potential vendors on setting up a sustainable online lending portal that would connect small business loan applicants with commercial lenders.

The portal would allow business users to enter relevant information regarding their financing needs and key financial and performance information critical to an underwriter's decision. The portal would then facilitate matching interested lenders with prospective borrowers.

"SBA's mission is to support the nation's economy by helping small businesses start, grow and expand, and a substantial part of that mission is met by our providing financial assistance," said SBA Administrator Steve Preston. "This portal will expand the ability of small businesses to access credit programs and of lenders to access a broader range of potential lenders."

There is one catch. An RFI is not an official solicitation and no contract will be awarded on the basis of this information, according to the SBA. So, just think of it as if you were working for free, which may be better than not working at all. Besides, if the specifications, pricing strategy, and project management ideas you submit get SBA's attention, there may be a bona fide opportunity here.

SBA suggests that interested parties address User Friendliness and Transparency, Market Coverage, Privacy Policy, Pricing Structure, Revenue Sharing, Timeline, and Risks.

I'll add a few they may later determine they are interested in: educational content strategy, development and delivery of co-branded marketing material from within the portal, social networking functionality for member banks (B2B) and consumers (B2C), online community management.

For additional information, visit http://www.fedbizopps.gov/.

PCVMurcor also approved for GMAC's Propertywise

Previously, I pointed out in this space that Zaio was working with GMAC-ResCap in its appraisal management division. PCVMurcor Real Estate Services, a Pomona, Calif.-based vendor management firm is also approved for that lender program, I have been told by the company.

GMAC has been developing Propertywise for a number of years. The new announcements come in the wake of a new Code for appraisal management advanced by the GSEs and resulting from discussions with New York's attorney general.

Wells Fargo goes with DocuSign eSig solution

DocuSign reports that Wells Fargo Funding is accepting disclosure documents signed with its electronic signature offering and suggests that it is a sign of growing adoption in the space. DocuSign is now on the bank's approved electronic signature vendor list.

While adding a vendor to a list may not really indicate growing acceptance, I do believe that electronic signatures are going to be more important to lenders and servicers this year as they work to trim more expense out of the transaction. The MBA, in association with Encomia, has already shown that electronic signatures will reduce hard expenses related to printing, mailing and sorting documents.

DocuSign has been a strong player in this area for some time. There are a number of other vendors that have been offering electronic disclosures for quite some time now.