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The future of mortgage banking

Sep 23, 2009

My company, like so many others, is changing the way we conduct business to keep up with the ever-changing market and environment. We are focusing on several tenants in our business: Customer service, technology and quality. Customer service/Phones Make it a point that all phone calls are answered, even if someone dials a direct line. After four rings, the lines hunt and the phone dials the all lines that are available or forwards the call on to an on-call representative. Customers want to speak to a person regardless if they are helped or not. When customers call, it is usually a sense of urgency because they are trying to get approved with Federal Housing Administration (FHA) loans, a line of credit with an investor or they are being audited. These things are important to the customer, and because they are routine in daily operations, every customer must be treated as if they are the company’s sense of urgency to support them in resolving their problems or concerns. Technology Customers want to feel that they are getting the best when they ask for services. Show them the additional value of technology in providing their results. Customers want to feel that their information is secure and protected, which is why every data center should make an SAS-70 Type II Certificate available. Customers want seamless integration and processes, and providing this through a variety of technologies in order to reduce work load efforts for efficiency is what today’s customers expect. Quality The end result or the final product must be of great quality from the perspective of the customer. If you have the best customer service and have integrated the best technology, it will not matter if the final product has not met the customer’s expectations. Two years ago, my company (Quality Mortgage Services), re-evaluated these three tenants of customer service, technology and quality, and set goals to strive to make this our core competency. The results have enabled us to gain more business and grow as a respectable business in the industry. On the horizon The change that we see on the horizon that may be necessary to keep up with an ever-changing market is change itself. Everything is changing in the industry. Those who do not change with the industry will surely fail. In order to stay current with the changes, one must stay informed. Stay active with local, regional and national mortgage professional trade organizations, and receive industry updates. Attend trade shows and luncheons. Read, read and read some more because different trade publications may take certain points of view and you need to balance it all out. Be flexible and have the ability to look ahead to see how change will impact your operations. The changing regulatory landscape New laws and policies are shaping the industry. Whether you agree or disagree with these changes, we all must adjust and adapt. All of the new policies and laws will impact us all. Look at what occurred in 2008 and 2009: Red Flag Rules, the Home Valuation Code of Conduct (HVCC), the Consumer Protection Financial Agency (CPFA), Truth-in-Lending and loan modifications are just a few. There are more changes that will require more flexibility and adjustment such as: How will the CPFA affect bank mortgage originators versus mortgage broker originators? Will the new proposed changes to HVCC affect the larger lenders who control appraisal management companies (AMCs) or who dictate to brokers which AMC to use? In 2010, I personally think the banks and large lenders will be mostly affected by the proposed policies and laws that went into effect in 2009. I also feel that with Fannie Mae and Freddie Mac coming out of conservatorship, making loans will become easier. We have yet to see the impact on the industry and the consumer as a result of the new Truth-in-Lending laws, CPFA, the Troubled Asset Relief Program (TARP) and the Term Asset-Backed Securities Loan Facility (TALF). Technology leading the charge There are many new technologies available that will take the mortgage banking market to the next level. A few of these technologies lie in pre-funding and post-closing quality control and quality assurance. Some lenders have started passing some pre-funding costs and responsibilities to the broker, such as ordering tax transcript and verifying Social Security numbers. The Mortgage Bankers Association, in conjunction with Mortgage Industry Standards Maintenance Organization (MISMO), is making benchmark progress with document standardization and data transfer consistency. An example is Freddie Mac Announcement 09-14, which requires the appraisal to be uploaded in XML (Extensible Markup Language). As MISMO continues to maintain technology standards within the industry, the closer we get to the seamless networking of data in business transactions between entities. The majority of vendors who support the industry seek MISMO approval. Those vendors who are not MISMO-friendly will not be able to perform services in the future. With the industry so focused on compliance and fraud prevention, more technology will fall in line to support those who are most at-risk, such as investors and lenders. With the CPFA coming online, the broker will have more skin in the game, and many of these technologies will be pushed down at the origination level in order to prevent fraud and maintain compliance. An example of this is the Financial Crimes Enforcement Network (FinCEN), who recently announced that it is looking for an advance notice of proposed rule-making (ANPRM). FinCEN is looking to solicit public comment on a wide range of questions pertaining to the possible application of anti-money laundering (AML) program and suspicious activity report (SAR) regulations to non-bank residential mortgage lenders and originators. This new initiative was brought about to target foreclosure rescue scams and loan modification fraud. These initiatives are helping in the coordination of information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions on emerging schemes, step up enforcement actions, and educate consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam. FinCEN has never included the originator in their efforts because it was focused on banks or larger financial institutions. Because of the sheer number of loan officer and brokers, FinCEN just increased its capability. Every mortgage professional has a responsibility to report fraud. I believe that trade organizations will fully support FinCEN’s efforts. Having the brokers participate in this type of technology will lend greater credibility to the retail side of the mortgage industry. To view the ANPRM, log on to To comment, log on to, select “Submit a Comment” and type “RIN 1506” in the keyword search box. In order to survive, adaptation to the endless stream of regulatory and legislative changes that are impacting the industry is a must. The old saying “the strong will survive and the weak will be devoured by the strong” applies to the mortgage industry. As a leader in your operation, you must write out your core competency and revaluate them often. Analyze what technologies work and which do not work. Evaluate what can be more efficient in workflow process and other processes, and find or develop the technology to support it. Do not become complacent in anything, and always treat the customer as if they are your sense of urgency. Know the law … policies and changes that are taking place around you. Be involved in the industry and support the trade organizations. Work toward credentials and require the same of your staff. Read, read and read some more … stay informed so that you can plan and prepare for the future. Keep the vision of the industry, regardless if you embrace this vision or not. Yes, we are all impacted by regulatory and legislative changes, but there will continue to be a demand for home and property financing. The professionals who plan and prepare for these regulatory changes will be the ones who will be able to perform the financing. The race has already begun, and some have already quit or lost. Some have restarted with a new team. I am encouraged that we will continue forging onward by adapting and adjusting because business is going to get better. This is an exciting time in the mortgage industry and a very interesting time to be part of it. Tommy A. Duncan is executive vice president of Quality Mortgage Services LLC. He may be reached by phone at (615) 591-2528, ext. 124.
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