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This month, we had a chance to chat with Steve Haslam, president and CEO of StreetLinks Lender Solutions headquartered in Indianapolis. Steve began his career with Associates Financial Services in the late 1970s as a manager in training in the consumer finance division. During his 12-year tenure there, he ran regional and national retail lending and operations platforms. Associates Financial was eventually bought by Citigroup and Steve moved on to the appraisal management industry after being recruited by LandSafe Inc., Steve was later recruited by NovaStar Financial to build up the company’s branch network and run the company’s retail channel. With the implementation of the Home Valuation Code of Conduct (HVCC), NovaStar purchased StreetLinks National Appraisal Services, the company that, despite a recent name change to StreetLinks Lender Solutions, Haslam runs to this day.
What was it that NovaStar saw in valuations and appraisals that made the company’s leadership decide to acquire StreetLinks?
Throughout my 20-year lending career, I always believed that, sooner or later, an independent appraisal process would need to be enforced in the mortgage industry. I always used AMCs (appraisal management companies) to accomplish this because I always felt that the appraisal process should be separated from the origination process. I thought it was healthy for good loan performance and operatonal efficiency. It never made sense to tie up loan officers with appraisers from a time management standpoint and to avoid any potential conflict of interest.
When there was word of the HVCC [Home Valuation Code of Conduct] coming on the scene in late 2008, it seemed that appraiser independence was finally being taken seriously and that there was going to be stricter enforcement.
As a lender, I had utilized StreetLinks for several years. They were the best AMC I had ever worked with. As the regulatory environment for appraisal procurement was shaping up, I thought the purchase of StreetLinks was a move in a positive direction.
Do you feel the smaller regionalized lenders that have a smaller footprint are better off using self-managed appraisal technology?
Technology in the appraisal process is appropriate if it is used properly and the lender has a stable of existing and properly-vetted appraisers. We always recognized the validity of a self-managed software platform, but we just never saw one we felt offered the best differentiation and best execution. We assessed whether to build this technology ourselves or whether to acquire someone in the market that could provide us with this option. That is when we discovered Corvisa. They had been on the market for less than a year, but built this wonderful technology, complete with compliance functions, tracking options, reporting mechanisms and accounting capabilities. Corvisa’s product had the ability to select appraisers on the basis of the proximity to the subject, service history and quality history, and allowed lenders to track their appraisal pipelines and keep a close watch on compliance.
StreetLinks doesn’t believe in telling a lender what they need. We consult with the lender and find out about their lending model, lending footprint and their desired appraisal process flow. Then, we customize an appraisal fulfillment solution for their situation. In other words, we basically design a unique solution from our suite of valuation products, using the technology and processes that best serve that lender’s compliance and business needs.
So your acquisition of Corvisa has allowed you to design products or solutions around the needs of the lender, rather than saying “These are the products that we have.”
Yes. Other companies do one or the other. Companies that offer only full AMC services attempt to persuade the lender that the AMC solution is the best and any other solution is wrong. If you look at advertisements for self-managed technology companies, they slam the AMC solution and tout that their technology solution is the best available. Quite frankly, that’s not the way to present a product. StreetLinks never did that, even when we only had a full AMC solution prior to “LenderX,” our self-managed solution. We just want to work with our customers to tailor the best solution for their business model. I think that’s the right way to approach the business.
Is the Corvisa product something that is an installed product or is it a Software as a Solution (SaaS) service product?
It’s now called StreetLinks LenderX and it’s an SaaS solution. It can also be easily integrated with the customer’s existing loan origination system (LOS). Our LenderX operations team works closely with the customer to make sure that their staff and appraisers are trained and all of the users and account preferences are properly loaded into the system.
Which, do you think, in the last five years, has been the greatest advancement in technology in the appraisal and valuation space?
This is going to sound self-serving, but to the best of my knowledge, any advancement on the appraisal technology side has only come from proprietary and innovative companies. The larger AMCs, in my view, are still stuck on old legacy technology. This has been advantageous for StreetLinks. When NovaStar acquired StreetLinks, the acquisition was based on our personal experiences with the company. We viewed us as acquiring a premier full-service and innovative AMC with the best technology platform in the AMC space. When we bought Corvisa late last year, we viewed that acquisition as the purchase of an innovative technology company. They had proprietarily built a best-of-breed lender-executed appraisal management software platform that we felt dwarfed anything else that was on the market. We found two companies in StreetLinks and Corvisa that excelled at what they do and that’s why we purchased them. It has made a huge difference for us.
StreetLinks has one of the best reputations as far as AMCs are concerned. Do you feel there is any point where a lender is better suited to handle the appraisal ordering process with their own appraisal desk rather than using an AMC?
Lenders have a few options. There is the methodology where you’re just running an appraisal desk without technology to help out. You just have dedicated staff in a separated office using spreadsheets and marker boards. I think lenders need to get away from that practice. I don’t know many lending operations where the people in the operational chain don’t ultimately report up to, in some way, a person who is responsible for the overall sales and loan production divisions of the company—which is prohibited under current regulations.
The next way is to deploy software and technology that, if utilized correctly, will assure compliance as it relates to independent appraiser selection and provide tracking and reporting for functional, as well as audit and compliance, purposes. We recently entered this space with LenderX and we are very excited about it. Lender-executed self-management technology has a strong place in the world of appraisal management today, especially for small- to mid-sized lenders that have built a solid panel of properly vetted appraisers.
The full AMC is the way to go for larger lenders who are looking for quality, service and appraiser independence guarantees, and who want to eliminate the variable staffing costs and compliance headaches that can be associated with self-management.
Do you feel that a lack of enforcement of appraisal independence rules had something to do with the downfall of the mortgage marketplace?
I think the mortgage meltdown was more the result of low interest rates, exotic loan products, looser lending standards and the government’s desire for everybody to own a home. The appraisal piece of the equation was the impetus of the mortgage meltdown.
Do you see the desired results in the marketplace as a result of appraisal independence or have there been unintended negative consequences?
I think it is important to note that appraiser independence has always been on the books. Regulations that already existed called for independent, unbiased and non-influenced valuations. The only thing the newer regulations did, whether the HVCC, or the Federal Housing Administration’s version of the same, or now under Dodd-Frank, is to put some muscle and teeth into it. The industry, as a whole, is now taking this issue seriously. I have been around this industry for 30 years, observing all of this, and I do not view the regulation as a dramatic change for three reasons: First, I always operated that way; second, because it makes sense; and third, the rules always existed but they just weren’t properly enforced. This is the natural progression of something that wasn’t taken as seriously as it should have been, and now, because of the mortgage meltdown, it is.
Do you feel that there are any improvements that need to be made to the appraiser independence process?
I thought the spirit of the HVCC and its underlying lender/appraiser separation mandate was right and that it was really nothing new. Everyone should have been operating that way anyhow.
What I didn’t like about the HVCC was the appraisal portability complications it created between competing lenders. If I originate a loan and want to flow or sell it to Bank A, and for some reason, the terms of the deal change and now I want to sell that loan to Bank B, it’s very difficult getting Bank B to take Bank A’s appraisal and to get that appraisal endorsed and moved over without additional work being done by the appraiser or without ordering a new appraisal. That slows the loan process down and ultimately costs the consumer and lender more time and money.
What is your feeling about the current role of the mortgage broker? Have there been any positive benefits to the mortgage broker due to appraiser independence?
I empathize with the mortgage broker in regards to appraiser independence. I think when all of this started, the mortgage broker was unduly blamed for violating appraiser independence. I just don’t agree with that. I think the mortgage broker was seen as a scapegoat in the national mortgage crisis, but let’s face it, the mortgage broker was driving 60 to 70 percent of the originations in the country. Do I think that mortgage brokers abused appraiser independence and created a market collapse? Absolutely not. It’s like any other industry … the majority were fine. I don’t subscribe to the idea that the mortgage broker created the meltdown. I think it was the exotic loans—the no docs, limited doc, non-income verification loans, etc.—and the fact that the capital markets were buying those loans and wanted more and more of them. The good thing about Dodd-Frank is that it levels the playing field for all originators. Whether you’re a broker, correspondent, or a loan officer for a big retailer, you now have to operate by the same appraiser independence rules.
What will be some other positive and/or negative influences of Dodd-Frank?
I think the biggest positive of Dodd-Frank Act is that it basically unifies this menu of appraiser independence regulations. You had the HVCC that only dealt with conforming loans; FHA had their own version that was very similar to HVCC with some nuances that came out months later.
You had different lenders that applied the HVCC rules to FHA loans prior to FHA coming out with their own. You had other lenders that ran one set of appraisal models against their conforming loans and then you had them run a different model against their FHA loans. Dodd-Frank solidifies appraiser independence procedures across all residential loans and lenders. Dodd-Frank acknowledges that appraiser independence is important and it is here to stay. We really won’t know of any downside until it is enacted.
What’s the most difficult decision you ever had to make in your career?
I think the most difficult decision I ever made was resigning from Associates Financial after CitiGroup purchased the company. At the time, I had been with Associates for 12 years, working my way up from branch manager to national operations vice president. Leaving them was a tough decision, but it turned out to be a very positive thing because I was recruited by LandSafe Appraisal. They wanted somebody from the loan production side of the business who understood the AMC process and could run their captive AMC operations. I learned the inside mechanics of how and how not to run an AMC there. If I didn’t resign my position at The Associates, I don’t know if I would have had the opportunity to lead this company today.
Do you have any mentors who have coached you through in the industry?
The first person that comes to mind is Tom Slone who ran the U.S. consumer division when I was at Associates Financial. He started at Associates in his late teens and retired from that company many decades later. He worked his way up from an entry level consumer finance position to be the president of a Fortune 100 global consumer finance company. I always felt Tom guided my career at The Associates and moved me into areas of exposure where I could gain knowledge so that I could grow. Tom ultimately became president of Big Brothers & Big Sisters for a while. Tom would be the first person that comes to mind as kind of a business father. Lance Anderson, who serves as president and chief executive officer of NFI, the majority owner of StreetLinks, is another mentor of mine. I have been working alongside Lance for almost eight years now and he has been a great inspiration to me in many ways. He has been terrific to work with and I’ve learned a lot from him.
Are there any particular management styles or techniques that you have implemented or utilized at StreetLinks or throughout your career?
The frontline employees—those who communicate with our lender clients and appraisers—are really the folks who define our company’s personality and unique value proposition. Working with AMCs for 20 years as a lender, my chances of calling an AMC and getting the phone answered in three rings or having an e-mail message returned inside of 20 min. would be a rarity. Here at StreetLinks, we have three to five times the amount of people per order volume as any other national AMC. We put a lot of trust in our frontline employees who are responsible for tracking and fulfilling orders through the entire appraisal process. Their input is welcomed and encouraged Most of our really good ideas and improvements have come from the suggestions of our frontline personnel. They are the ones talking to the lenders and appraisers. These are the people who have to make the best impression and deliver quality service. Our people on the frontlines dictate the destiny of the company.
We have grown our staff from 25 employees to over 300 employees in the past 18 months, and everybody in management today was promoted from within. We haven’t hired a manger from the outside. The original ownership team is still intact as well. Those who run the quality control department and are involved in all post-QC areas are licensed and experienced appraisers. Everybody in our company is treated like a mini-owner. Every StreetLinks employee participates in a profit-sharing plan every quarter.
Our employees live and breathe StreetLinks. They feel they are adding value and feel special because they know that we do the business differently. They know that service is the backbone of our reputation and they take a lot of pride in those qualities.
We have a very open management style at StreetLinks … I don’t even like to use the word “executive” because it sounds too lofty. We all have our doors open, we have suggestion boxes, we walk the floor, spend a lot of time with our people and we do a lot of charity work together as a team. I cannot tell you how much improvement we have derived just by having our doors open and having frontline employees come in and say, “Have you thought about doing it this way?” We have a great nucleus in our Indianapolis-based headquarters and there’s a great work ethic here.
All I and the other leaders who have a door on their office do is set the vision, strategy and direction for the future. It’s the people on the floor that make or break our business. We just happen to have very great ones at StreetLinks and I have been very fortunate in that regard.
Are there any books that have been influential in your development or a book that had a profound impact on your life?
There are several books I go back to frequently for business management, time management and proper thinking. If I could pick one particular author, and there have been many, it would be Brian Tracy. Brian Tracy’s book, Maximum Achievement: Strategies and Skills That Will Unlock Your Hidden Powers to Succeed, was one of the first real personal development business books I ever read. I’m going back 30 years ago and Brian Tracy is still going and relevant today! I would say Brian has been the most influential person I’ve never met in that, through his writings and audio books, he did the most to shape my thinking in the business realm.
Prior to getting involved in the finance industry, I worked for a national swimming pool company, Kayak Pool Corporation, where I started as a pool salesman and worked my way up to executive vice president of the company. When I started there, I ran leads and drove hours around the state of New York to sit in a home and give a swimming pool presentation that lasted two or three hours. I had all of Brain Tracy’s audio tapes in my car along for those rides, and my car was like a university on wheels. I wouldn’t listen to music or the news, I would just listen to Brian Tracy cassettes.
What are some activities or hobbies that you enjoy out of the office?
I love to play chess … I find it very relaxing. I also love going to my son’s hockey games. He started playing hockey when he was eight-years-old and he’s now 22 and a senior in college. I’ve probably been to every regional and national tournament that he’s ever been in.
What does the future hold for StreetLinks and its customers?
We recently redefined our company and legally changed our name from “StreetLinks National Appraisal Services” to “StreetLinks Lender Solutions.” We feel that there is enormous opportunity in other areas of the industry to differentiate and add value. Within the first half of 2011, we will be entering the broker price opinion (BPO) space and offering a differentiated, higher value, higher quality BPO product. We are also currently working on what we hope will be the best automated valuation technology and models the industry has seen … Intelligent Valuation Models or IVMs.
We envision ourselves in the next three to five years becoming the industry’s premier lending solution company, not just an AMC, but a company that provides lenders with the best solutions in the valuation and lender services markets by delivering a variety of products that are better than what’s on the market today. Right now, that is what we are really focusing on and emphasizing.